AUDUSD on Shaky Ground: Key Indicators Signal Downtrend

The AUDUSD has been on a downward trend due to global economic uncertainties and weaker demand for Australian exports. Technical indicators such as the “Death Cross” and declining EMAs add to this bearish outlook, with Momentum and RSI pointing to sustained negative pressure. Key economic events this week, including GDP data from Canada and the US nonfarm payrolls, could impact the pair. Traders are watching resistance levels at 0.66557 and 0.67222 and support at 0.65481 and 0.65192 as potential reaction points amid a cautious market sentiment.

Thursday 03:30 am (GMT+2) – China: Manufacturing PMI (CNY)
Thursday 04:30 am (tent)- (GMT+2) – Japan: BOJ Policy Rate (JPY)
Thursday 14:30 (GMT+2) – Canada: GDP m/m (CAD)
Thursday 14:30 (GMT+2) – USA: Core PCE Price Index m/m (USD)
Thursday 14:30 (GMT+2) – USA: Unemployment Claims (USD)
Friday 14:30 (GMT+2) – USA: Nonfarm Employment Change (USD)
Friday 16:00 (GMT+2) – USA: ISM Manufacturing PMI (USD)

Since reaching a high of 0.69411 on September 30, the AUDUSD prices have decreased due to a combination of technical and fundamental factors.
On October 21, a breach of the trough at 0.66557 opened the way for further reductions in the exchange rate between the Australian and the US dollar. Additionally, prices fell below the 20-period and 50-period Exponential Moving Averages (EMAs), intensifying the downward pressure. Also, the formation of a “Death Cross” double crossover where the short EMA crossed below the longer EMA validated the downward pressure.
Furthermore, the Momentum oscillator indicates values below the 100 mark, and the Relative Strength Index (RSI) is below the 50 level, both of which signal sustained negative momentum in the near term.

If buyers gain control of the market, traders may shift their focus to the following four potential resistance levels:
0.66557: The first level of resistance is projected at 0.66557, which aligns with the swing low from October 17.
0.67222: The second price target is seen at 0.67222, corresponding to the swing high marked on October 21.
0.67636: The third price objective is estimated at 0.67636, representing the weekly resistance, R2, calculated using the standard Pivot Points methodology.
0.68228: An additional price target is established at 0.68228, corresponding to the peak formed on August 29.

If sellers maintain control of the market, traders may focus on the following four key support levels:
0.65481: The initial support level is identified at 0.65481, representing the 261.8% Fibonacci Extension drawn from the low point of 0.66557 to the high point of 0.67222.
0.65192: The second support level is seen at 0.65192, reflecting the weekly support, S2, calculated using the standard Pivot Points methodology.
0.64405: The third support level is positioned at 0.64405, aligning with the 423.6% Fibonacci Extension drawn from the low point of 0.66557 to the high point of 0.67222.
0.63474: An additional downside target is noted at 0.63474, corresponding to the daily low from August 5.

The AUDUSD continues to drop as economic uncertainty puts pressure on the Australian dollar. Concerns about the global economy, alongside Australia’s exposure to fluctuating commodity markets, have led to increased selling pressure on the AUD, pushing it lower against the USD. The weakening outlook for demand in key Australian exports and the Federal Reserve’s steady interest rate policy in the US are contributing factors to the AUD’s ongoing downward trend. Traders are eyeing potential support levels, but current sentiment remains cautious given the prevailing macroeconomic uncertainties.

In October, private sector employment in the US increased by 233,000 jobs, marking robust job growth as companies recovered from recent hurricanes. The ADP National Employment Report, using real-time payroll data, highlights a strong labor market with hiring concentrated in large firms, which added 140,000 jobs. Pay growth for job-stayers rose 4.6% year-over-year, while job-changers saw a 6.2% increase, both indicating a gradual slowdown. Manufacturing was the only sector to report job losses, while the Northeast and South regions led in job gains.

The modest 0.2% CPI increase for the September quarter and the annual 2.8% inflation rate indicate that inflationary pressures in Australia are cooling, especially in goods, thanks to government energy rebates and lower fuel prices. This lower inflation environment could reduce the likelihood of the Reserve Bank of Australia (RBA) raising interest rates soon, which may weaken the Australian dollar. Lower rates or a delay in hikes can make the AUD less attractive to investors seeking higher yields, potentially leading to a softer AUD against stronger currencies.

The AUDUSD remains under significant downward pressure, driven by global economic concerns, weaker demand for Australian exports, and a steady US interest rate environment. Technical indicators, including the “Death Cross” and declining EMAs, highlight a bearish outlook, with sustained negative momentum suggested by the Momentum oscillator and RSI. Upcoming high-impact economic events, such as US nonfarm payrolls and Canadian GDP, could trigger reactions at key support and resistance levels, which traders will closely monitor for potential shifts in sentiment. For now, cautious market sentiment keeps the AUD vulnerable to further downside movement.