**AUD/USD Declines Further, Trades Below Key Moving Average at 0.6555**
*Adapted and expanded from the original article by Yohay Elam for FXDailyReport*
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**Overview of the Latest AUD/USD Price Action**
The Australian dollar (AUD) has continued its weakening trend against the US dollar (USD), with the AUD/USD currency pair falling further below the pivotal 100-hour moving average. On the day in focus, price action revealed a decisive bearish sentiment, pushing the pair down to the 0.6555 level. This decline highlights persistent concerns about the macroeconomic environment, Reserve Bank of Australia (RBA) policy, and the relative strength of the US dollar.
**The Technical Landscape**
A significant technical event occurred when AUD/USD breached its 100-hour moving average to the downside. This is generally interpreted as a bearish indicator by market participants, as it signals momentum away from recent support levels.
Key technical observations:
– The 100-hour moving average had provided effective short-term support to the pair over the past week.
– A sustained move below this average often suggests building downside pressure, inviting additional selling from both momentum and technical traders.
– Immediate resistance is now seen at the previous support zone around the 100-hour and 200-hour moving averages.
– Support levels can be found at recent swing lows and psychological round numbers, including 0.6550 and 0.6520.
Additionally, other technical indicators, such as the Relative Strength Index (RSI), have pointed towards renewed bearish momentum, with readings staying well below the 50 threshold. The Moving Average Convergence Divergence (MACD) histogram continues to drift toward the downside, supporting the negative outlook.
**Fundamental Factors Driving AUD/USD Lower**
Several intertwined factors are contributing to the Aussie’s decline:
1. **RBA’s Policy Stance**
– The Reserve Bank of Australia has recently signaled a cautious and data-driven policy posture amid mixed domestic economic indicators.
– While some market analysts have speculated on possible rate hikes due to lingering inflation, the central bank appears wary of overtightening, particularly as consumer spending softens.
– The lack of hawkish signals has diminished the AUD’s yield allure relative to the USD, which remains underpinned by higher US rates.
2. **US Dollar Strength**
– The US dollar has benefited from safe-haven demand amid global market uncertainty and expectation for a prolonged period of higher interest rates by the Federal Reserve.
– Stronger-than-expected US macroeconomic releases, such as Non-Farm Payrolls and manufacturing indices, provide further support to the USD against risk-sensitive currencies like the AUD.
3. **Chinese Economic Outlook**
– As China is Australia’s largest trading partner, the health of its economy has a significant impact on Australian exports and, by extension, the AUD.
– Recent data from China have pointed to ongoing struggles in the property sector and uneven recovery in industrial activity.
Read more on AUD/USD trading.