AUD/USD Price Forecast: The bearish tone is expected to persist near term

• AUD/USD lost further ground and printed new lows near 0.6450.
• The US Dollar’s rally seems to have shown signs of exhaustion.
• The Australian labour market report came in pretty strong.

The US Dollar continued its rally on Thursday, with the Dollar Index (DXY) clinching new 2024 peaks past the key 107.00 barrier. This early uptick, however, lost momentum towards the end of the day.

That said, the Australian Dollar (AUD) initially slipped back to new monthly lows near 0.6450, just to regain some composure afterwards and eventually approach the 0.6500 hurdle. So far, the pair still remains below the critical 200-day Simple Moving Average (SMA) of 0.6628, leaving further downside potential still on the table.

The Aussie’s price action also came in tandem with marginal developments in both copper and iron ore prices, both managing to rebound from recent lows. It is worth noting that weekend data from China showed consumer prices growing at their slowest pace in four months, stoking fears of deflation and raising doubts about the effectiveness of recent economic stimulus measures.

On the home front, the Reserve Bank of Australia (RBA) held interest rates steady at 4.35% during its November 5 meeting, aligning with market expectations. The RBA acknowledged some progress towards its inflation target but slightly downgraded its growth outlook. Governor Michele Bullock’s remarks suggested the current rate-setting remains appropriate, though traders are now betting on a possible rate cut in May 2025.

Still around Bullock, she stated during an overnight panel discussion that the central bank intends to maintain restrictive monetary policy until it is confident that inflation is on a clear downward path.

Australia’s latest inflation figures showed some cooling, with September’s CPI inflation easing to 2.1% and the Q3 annual rate dipping to 2.8%. While a potential rate cut by the Federal Reserve might lend support to AUD/USD, lingering inflation risks—especially under a potential Trump presidency—could keep the US Dollar strong, capping any significant upside for the pair. Concerns over China’s economic health may also continue to pressure the Aussie.

On the data front, Australia’s labour market report for the month of October saw the Unemployment Rate hold steady at 4.1%, while the Employment Change increased by 15.9K individuals and the Participation Rate slightly receded to 67.1%. Additionally, Consumer Inflation Expectations eased to 3.8% in November (from 4.0%), according to the Melbourne Institute.

AUD/USD daily chart

Technical Outlook for AUD/USD

In the short term, if sellers maintain control the next support level is the November low of 0.6452 (November 14), followed by the 2024 bottom at 0.6347 (August 5).

On the upside, initial resistance is at the 200-day SMA of 0.6628, before testing the November high of 0.6687 (November 7), which remains bolstered by the 100-day SMA.

The four-hour chart suggests the bearish trend seems to have met some contention for the time being. initial support comes at 0.6452 and then 0.6347. On the flip side, resistance may come into play at the 55-SMA (0.6574) and the 100-SMA (0.6585). The RSI rebounded to about 34.