- AUD/USD continues losing ground for the third straight day and drops to over a one-month low.
- Disappointment over China’s stimulus, risk-off mood and a bullish USD contribute to the decline.
- Bears turn cautious ahead of the Australian jobs data on Thursday and Chinese data on Friday.
The AUD/USD pair maintains its offered tone through the first half of the European session and trades around the 0.6690-0.6685 region, just above a one-month low touched earlier this Thursday. The lack of specifics about the overall size of the fiscal stimulus from China left investors uncertain and derailed the recent positive momentum in the equity markets. Apart from this, persistent geopolitical risks stemming from the ongoing conflicts in the Middle East temper investors' appetite for riskier assets, which, in turn, is seen undermining demand for the Aussie.
Apart from this, the prevalent bullish sentiment surrounding the US Dollar (USD) overshadows the Reserve Bank of Australia (RBA) Deputy Governor Sarah Hunter's hawkish remarks and exerts additional downward pressure on the AUD/USD pair. Hunter noted that price growth has remained a sticking point and that the RBA remains determined to keep inflation under control. Hunter added that the RBA is not obligated to conform to other central banks on policies, reaffirming expectations of a no change in the cash rate target rate at the November policy meeting.
Meanwhile, the USD Index (DXY), which tracks the Greenback against a basket of currencies, jumps to its highest level since August 8 amid growing acceptance that the Federal Reserve (Fed) will proceed with modest interest rate cuts. The markets are currently pricing in over a 90% chance that the US central bank will lower borrowing costs by 25 basis points on November 7. This, in turn, assists the USD to capitalize on its recent uptrend witnessed over the past three weeks or so and contributes to the AUD/USD pair's intraday fall below the 100-day Simple Moving Average (SMA).
The intraday slide, however, stalls near the 0.6670-0.6665 region as traders opt to move on the sidelines ahead of the Australian monthly employment details, due for release during the Asian session on Thursday. This will be followed by US economic releases – Retail Sales, Weekly Initial Jobless Claims and Industrial Production figures. Apart from this, the Chinese macro data dump on Friday – including the third quarter GDP report – will influence the Australian Dollar (AUD) and help in determining the next leg of a directional move for the AUD/USD pair.
Technical Outlook
From a technical perspective, the intraday breakdown below the 100-day SMA could be seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart have been gaining negative traction and are still away from being in the oversold territory. This, in turn, suggests that the path of least resistance for the AUD/USD pair is to the downside. Hence, a subsequent fall towards challenging the very important 200-day SMA, currently pegged near the 0.6625 region, looks like a distinct possibility. The latter coincides with the September monthly swing low and should act as a key pivotal point, which if broken decisively should pave the way for a further near-term depreciating move.
On the flip side, any attempted recovery beyond the 0.6700 mark is likely to attract fresh sellers and remain capped near the 0.6750-0.6760 region. A sustained strength beyond, however, might trigger a short-covering rally and lift the AUD/USD pair to the 0.6800 mark. The momentum could extend further towards the 0.6820-0.6825 region, above which spot prices could climb to the 0.6900 round figure. The momentum could extend further towards the 0.6940-0.6945 area, or the highest since February 2023 touched last month.
AUD/USD daily chart
(This story was corrected on October 16 at 07:30 GMT to say that the AUD/USD pair trades near a one-month low touched earlier this Wednesday, not Thursday.)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD consolidates near two-week high, looks to US NFP for fresh impetus
AUD/USD holds steady around the 0.6335 area during the Asian session on Friday as traders now await the US NFP report. Bets that the Fed will cut rates further amid concerns over failing US economic growth keep the USD depressed near a multi-month low and act as a tailwind for spot prices, though tariff jitters warrant caution for bulls.
USD/JPY seems vulnerable amid divergent Fed-BoJ expectations; US NFP awaited
USD/JPY languishes near its lowest level since October touched on Thursday amid a bearish USD, led by bets that the Fed could cut rates multiple times in 2025 amid slowing US economic growth. Moreover, the hawkish sentiment surrounding the BoJ's policy outlook underpins the JPY and validates the negative bias for the pair.
Gold price remains depressed ahead of US NFP; trade jitters to limit losses
Gold price trades with negative bias for the second straight day, though a combination of factors continues to act as a tailwind ahead of the crucial US NFP report later this Friday. Rising trade tensions continue to weigh on investors' sentiment.
XRP investors enlarge realized profits to $2 billion despite potential inclusion in US crypto reserve
Ripple's XRP managed to record gains on Thursday despite investors expanding their total realized profits to about $2 billion since the beginning of the week.
Make Europe great again? Germany’s fiscal shift is redefining the European investment playbook
For years, Europe has been synonymous with slow growth, fiscal austerity, and an overreliance on monetary policy to keep its economic engine running. But a major shift is now underway. Germany, long the poster child of fiscal discipline, is cracking open the purse strings, and the ripple effects could be huge.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.