The AUD/USD pair has hit new lows for 2024, dropping to the 0.6350 level as the risk-off sentiment in the market continues to weigh down on the Australian dollar and commodities. This downward trend marks the fourth consecutive week of losses for the currency pair.
With the Aussie dollar trading below the key 200-day SMA (0.6592) against the US Dollar, there is a clear indication of vulnerability to further downside movement in the short term.
The recent sell-off in the markets has been fueled by concerns over a potential slowdown in US economic activity and speculation about an emergency rate cut by the Federal Reserve. This risk aversion has also impacted copper prices, while iron ore prices have seen a modest rebound.
On the monetary policy front, the Reserve Bank of Australia (RBA) is expected to maintain its interest rate at 4.35% in the upcoming meeting on August 6. This decision comes in light of the latest inflation data, which has lowered expectations of further rate hikes by the central bank.
Looking ahead, the RBA is likely to be more cautious in its approach to interest rate changes compared to other G10 central banks. While the Fed may consider easing its policy, the RBA is expected to remain on hold for the rest of the year.
Despite potential support from a dovish Fed, concerns about the Chinese economy could pose challenges for the Australian dollar. As China grapples with post-pandemic issues and lackluster economic data, demand for Australian exports may be affected.
Technical analysis suggests that the AUD/USD pair could see further losses, with key support levels at 0.6347 and 0.6270. Resistance levels are at 0.6591 and 0.6601, with bullish momentum limited by the 200-day SMA.
In conclusion, the AUD/USD pair is facing downward pressure due to market sentiment and economic uncertainties. Investors should monitor key support and resistance levels to gauge the currency pair’s future direction.
