AUD/USD Forecast: Dollar dominance continues

Matías Salord FXStreet

AUD/USD Current Price: 0.6302

The US Dollar extends its rally as US yields reach fresh multi-year highs.
As expected, the Reserve Bank of Australia kept rates unchanged, while US data exceeded expectations.
The AUD/USD pair remains under pressure after reaching the lowest level in 11 months, below 0.6300.

The AUD/USD pair sharply declined for the second consecutive day, breaking decisively below 0.6350 due to a stronger US Dollar and risk aversion sentiment. Economic data from the US, along with cautious investor sentiment, kept the Dollar in high demand.

Earlier Tuesday, the Reserve Bank of Australia (RBA) left the key interest rate unchanged at 4.10% as expected. The statement contained minor changes compared to the previous one, and Michele Bullock offered no surprises at her first meeting as Governor.

Considering Chinese economic data and the global growth outlook, the RBA is unlikely to hike rates again this year. Incoming inflation data will likely play a crucial role in the RBA's decision at the next meeting on November 7. The release of the Monthly Consumer Price Index and the quarterly inflation report is on October 25.

The key driver for AUD/USD remains the strength of the US Dollar. The greenback gained momentum across the board, particularly following the release of the JOLTS Job Opening report, which exceeded expectations. More employment data is due in the US on Wednesday, including the ADP Private Payrolls. Additionally, Factory Orders and the final reading of the Global S&P PMI are scheduled. Following the data on Tuesday, the US 10-year Treasury yield climbed to 4.79%, marking new cycle highs. The combination of cautious markets, positive US data, and higher yields continues to support the rally of the US dollar.

AUD/USD short-term technical outlook

The AUD/USD is on the verge of posting the lowest daily close in 11 months, well below 0.6350. Technical indicators on the daily chart have turned bearish, with Momentum breaking below the midpoint and the Relative Strength Index (RSI) moving south but not yet reaching oversold levels. A daily close above 0.6500 would negate the bearish outlook.

On the 4-hour chart, the pair is oversold, and some consolidation ahead of the Asian session appears likely, possibly around 0.6300. The Relative Strength Index is starting to turn towards 30 from below. The bias is downward, with the price well below key SMAs (Simple Moving Averages). However, after a consistent decline, some stabilization before another leg lower seems probable. A break below 0.6280 would open the doors to the next strong support level at 0.6250. On the upside, immediate resistance is now seen at 0.6330, followed by the 0.6350 area. A move above these levels would alleviate the bearish pressure.

Support levels: 0.6280 0.6255 0.6235

Resistance levels: 0.6330 0.6350 0.6385

View Live Chart for the AUD/USD

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Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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