- AUD/USD drifts lower for the fifth successive day and drops to a fresh YTD low on Monday.
- A softer risk tone and a modest USD strength exert heavy pressure on the risk-sensitive Aussie.
- The technical setup favours bearish traders and supports prospects for further near-term losses.
The AUD/USD pair continues losing ground for the fifth successive day and drops to a fresh low since November 2022, closer to mid-0.6400s during the Asian session on Monday.
The worsening economic conditions in China, along with US-China tensions and geopolitical risks, temper investors' appetite for riskier assets and drive flows away from the risk-sensitive Australian Dollar (AUD). The US Dollar (USD), on the other hand, climbs to a multi-week top and remains well supported by growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer. This, in turn, is seen exerting downward pressure on the AUD/USD pair and contributing to the ongoing decline.
From a technical perspective, a subsequent slide and acceptance below the 0.6500 psychological mark add credence to the recent breakdown through the bearish double-top neckline support near the 0.6600 horizontal level. This, along with the aforementioned fundamental backdrop, suggests that the path of least resistance for the AUD/USD pair is to the downside. That said, the Relative Strength Index (RSI) on the daily chart has moved on the verge of breaking into the oversold zone and warrants some caution.
Hence, it will be prudent to wait for some near-term consolidation or a modest bounce before traders start positioning for a further depreciating move. Any attempted recovery, however, is more likely to confront stiff resistance and meet with a fresh supply near the 0.6500 mark. This, in turn, should cap the AUD/USD pair near the 0.6530 area, which should now act as a pivotal point. A sustained strength beyond might trigger a short-covering rally and lift spot prices towards the 0.6600 round figure.
The latter is closely followed by last week's swing high, around the 0.6615 region, above which the AUD/USD pair could extend the momentum further towards the 0.6700 mark, representing the 50-day Simple Moving Average (SMA), en route to the very important 200-day SMA, currently pegged around the 0.6725-0.6730 area.
The AUD/USD pair, meanwhile, seems poised to weaken further below the 0.6455-0.6450 area and eventually drop to the 0.6400 round figure. Some follow-through selling will expose the next relevant support near the 0.6365-0.6360 region and the 0.6300 mark, which if broken decisively will be seen as a fresh trigger for bearish traders and pave the way for further losses.
AUD/USD daily chart
-638275828943103685.png)
Technical levels to watch
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
EUR/USD struggles to hold above 1.0400 as mood sours
EUR/USD stays on the back foot and trades slightly below 1.0400 following the earlier recovery attempt. In the absence of high-tier data releases, the negative shift seen in risk mood helps the US Dollar gather strength and forces the pair to stretch lower.
GBP/USD declines toward 1.2500 on renewed USD strength
GBP/USD loses its traction and declines to the 1.2500 area in the second half of the day on Monday. The US Dollar (USD) benefits from safe-haven flows and weighs on the pair as investors await US Consumer Confidence data for December.
Gold drops below $2,620 as US bond yields edge higher
After starting the week in a quiet manner, Gold comes under bearish pressure and retreats below $2,620. The benchmark 10-year US Treasury bond yield stays in positive territory above 4.5%, making it difficult for XAU/USD gain traction.
Bitcoin fails to recover as Metaplanet buys the dip
Bitcoin hovers around $95,000 on Monday after losing the progress made during Friday’s relief rally. The largest cryptocurrency hit a new all-time high at $108,353 on Tuesday but this was followed by a steep correction after the US Fed signaled fewer interest-rate cuts than previously anticipated for 2025.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.