**AUD/USD Under Pressure: Breaks Below Key Moving Average, Trades Near 0.6555**
*Original reporting by Kelvin Maina for FXDailyReport*
The Australian Dollar (AUD) witnessed subdued performance against the US Dollar (USD) as it extended its losses below the crucial 100-hour moving average, now hovering close to the 0.6555 level. In the early Asian session, the pair experienced heightened volatility, following a sequence of fundamental factors and market sentiment that contributed to the bearish momentum.
**Recent Price Action and Technical Overview**
AUD/USD has seen a notable downward movement as it failed to maintain its position above the 100-hour moving average (MA), a significant technical indicator for many short-term traders. After multiple attempts to consolidate above the 0.6600 psychological mark, the pair lost momentum amid renewed demand for the US Dollar and lackluster performance in the Australian currency.
– **Bearish Momentum:** Downward trend reinforced as the AUD/USD breached the moving average.
– **Immediate Support:**
– 0.6550 level acts as a support zone, tested in today’s session.
– **Resistance Levels:**
– Immediate resistance stands at last week’s high at 0.6610
– Further resistance at 0.6640, which is another key level extricated from prior price action.
The pair’s inability to defend the 100-hour MA indicated a further depreciation, with sellers eyeing lower support levels if bearish sentiment persists.
**Catalysts for AUD/USD Weakness**
The Australian Dollar’s decline against its US counterpart stems from a confluence of macroeconomic triggers:
1. **Stronger US Dollar Amid Global Uncertainty:**
– The DXY Dollar Index rose sharply as risk-averse traders sought refuge in safe-haven assets.
– US economic data, including recent labor market figures, outperformed expectations. Jobless claims remained subdued, and continued job creation helped bolster the US currency.
– Ongoing uncertainty about global growth, especially concerns regarding the Chinese economy, weighed heavily on risk-sensitive currencies such as the AUD.
2. **Weak Aussie Data and Reserve Bank of Australia (RBA) Stance:**
– Domestic economic reports for Australia have been mixed, showing subdued retail sales and decelerating inflation.
– The RBA’s recent monetary policy statement revealed a dovish stance, with policymakers reiterating a cautious approach to future rate changes.
– The central bank’s emphasis on monitoring the impact of past rate hikes and maintaining flexibility leaves the AUD susceptible to further downside should data underperform.
3. **Softer Commodity Prices:**
– As Australia is a major exporter of metals and energy, reduced demand and softer prices in the commodity market have diminished support for its currency.
– Iron ore, in particular, saw price declines due to slowing Chinese industrial demand. This directly correlates with the pressure on the AUD.
**Macro Backdrop: Comparing US and Australian Economies
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