The US Dollar Continues to Strengthen

  • AUD/USD lost further ground and tested four-day lows near 0.6530.
  • The US Dollar advanced to new highs helped by Trump and yields.
  • Australia’s Consumer Confidence improved in November, said Westpac.

As the US Dollar Index (DXY) reached fresh four-month highs above 106.00, the US Dollar maintained its upward trajectory on turnaround Tuesday, supported by positive news from President Trump and rising yields.

Factors Impacting the Australian Dollar (AUD)

On the other hand, the Australian Dollar struggled as it fell below 0.6600, breaching its key 200-day Simple Moving Average (SMA) of 0.6629. The following factors contributed to the Aussie’s decline:

  • Decrease in copper and iron ore prices
  • Disappointing data from China showing slow growth in consumer prices
  • Concerns about China’s economic health and stimulus measures

Reserve Bank of Australia (RBA) and Economic Data

The RBA maintained interest rates at 4.35% during its November meeting, with a neutral policy outlook. Despite gradual progress towards the inflation target, the RBA slightly adjusted its growth forecast. Speculation surrounds a potential rate cut in May 2025, positioning the RBA as one of the last G10 central banks to consider easing.

Recent inflation data reflected a cooling trend, with the Consumer Price Index (CPI) for September slowing to 2.1%.

Outlook for AUD/USD

While potential Federal Reserve rate cuts may benefit AUD/USD, the strength of the US Dollar due to expected inflationary pressures under a Trump administration could limit the pair’s upside. Ongoing concerns about China’s economic outlook also weigh on the Aussie.

Market Sentiment and Technical Analysis

Speculators were net buyers of the Australian Dollar, but caution prevailed in the market. Consumer Confidence and Business Confidence in Australia showed improvement in November and October, respectively.

AUD/USD daily chart

AUD/USD short-term technical outlook

In the short term, the AUD/USD faces key levels:

  • Resistance at 0.6687 and 0.6715, followed by 0.6942
  • Support at 0.6528, 0.6511, and 0.6347

On the four-hour chart, the AUD/USD trend remains negative with immediate support at 0.6528 and resistance at 0.6590 and 0.6606. The RSI indicator is around 34.

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