The AUD/USD pair has accelerated its decline below the key level of 0.6600, signaling further losses ahead. Chinese economic concerns and a slump in commodity prices are driving this downward trend, with the pair now flirting with the critical 200-day SMA around 0.6580.
The recent decision by the People’s Bank of China to cut interest rates has also had a negative impact on the Australian dollar, as it is closely tied to the Chinese market. Additionally, falling prices of copper and iron ore have contributed to the Aussie’s sell-off, reflecting broader weakness in the commodity sector.
While the Reserve Bank of Australia (RBA) has maintained a hawkish stance on monetary policy, potential easing by the Federal Reserve (Fed) could provide some support for the AUD/USD pair in the medium term. However, challenges in the Chinese economy, including post-pandemic issues, deflation, and lack of stimulus, may hinder a sustained recovery of the Australian dollar.
On the technical front, further losses in AUD/USD could find support at the July low of 0.6583, followed by the June and May lows. On the upside, resistance levels are at the intermediate 55-day SMA and the July peak. Overall, the uptrend should remain intact as long as the pair trades above the 200-day SMA.
For traders and investors, keeping an eye on Chinese economic data, commodity prices, and central bank policies will be crucial in determining the future direction of the AUD/USD pair. With potential headwinds from China and global economic conditions, it’s important to stay informed and be prepared for further volatility in the forex markets.