The AUD/USD pair continued its downward trend on Tuesday, with China’s economic prospects and weaker commodity prices keeping the Australian dollar subdued. The pair is now approaching the key 200-day SMA after losing nearly 2 cents since hitting monthly peaks on July 11 around 0.6800.
The recent interest rate cut by the PBoC, along with the US dollar’s rebound and ongoing weakness in commodity prices, have contributed to the Aussie dollar’s decline. The PBoC’s decision to lower interest rates has also impacted the Chinese yuan, affecting the Australian dollar due to Australia’s economic reliance on China.
In addition, falling copper and iron ore prices have added to the sell-off in the AUD, as the broader commodity complex remains under pressure. The Reserve Bank of Australia (RBA) has maintained a hawkish stance on monetary policy, opting not to lower interest rates at its latest meeting despite considering another rate hike to combat inflation.
Looking ahead, potential easing by the Federal Reserve could provide support for AUD/USD in the coming months. However, concerns about China’s economic slowdown and lack of stimulus may hinder a sustained recovery for the Australian currency.
Technical analysis suggests that further losses in AUD/USD could find support at the 100-day SMA at 0.6607 before targeting the 200-day SMA at 0.6583. Bullish moves may face resistance at the 55-day SMA at 0.6663 and the July high of 0.6798.
AUD/USD Short-Term Technical Outlook
On the 4-hour chart, the negative bias is increasing, with immediate support at 0.6611 and 0.6585. Resistance levels include the 200-SMA at 0.6678 and the July high of 0.6798.
In conclusion, the downward trend in AUD/USD is likely to continue, with key support levels to watch for potential reversals. Traders should monitor China’s economic data and commodity prices for further insights into the pair’s future movements.