**AUD/USD Slides as Key Support Levels Approach**
*Based on the article by Justin Low at ForexLive and expanded with additional analysis.*
**Overview**
The Australian Dollar (AUD) has come under increasing pressure in global markets, particularly against the United States Dollar (USD). As we enter the middle of the trading week, AUD/USD has fallen to new lows not seen since last year, breaking notable technical levels on its way down. This shift has brought focus to several major support areas, heightening anticipation among traders about what might come next for the currency pair.
**Recent Performance**
– AUD/USD slipped significantly at the start of the week, with the downward move extending through Wednesday.
– As of the latest session, the currency pair is trading near 0.6570, its lowest point in two months.
– The slide through the 200-day moving average is a crucial technical event, often regarded by traders as a signal for further downside momentum.
– Market sentiment around the AUD has remained weak due largely to shifting monetary policy expectations and a stronger USD.
**Key Drivers Behind AUD/USD’s Decline**
Several interconnected factors have contributed to the current bearish trend for the Australian Dollar:
1. **US Dollar Strength**
– The USD has performed robustly in recent weeks, attracting safe-haven flows as market participants reprice expectations for US Federal Reserve policy.
– Recent US economic data, particularly on job creation and inflation, has favored the USD, supporting its rise against most major currencies.
2. **Monetary Policy Outlook**
– The Reserve Bank of Australia (RBA) has maintained a cautious approach to rate hikes, leaving the nation’s official cash rate unchanged in recent decisions.
– Meanwhile, the US Federal Reserve continues to deliver hawkish guidance, keeping interest rates steady at elevated levels compared to Australia.
– This policy divergence has translated into reduced yield appeal for holding the AUD, compelling investors to rotate capital into the USD.
3. **Risk Sentiment and Commodity Prices**
– Australia’s economy is heavily reliant on commodity exports, particularly to China. Fluctuations or slowdowns in Chinese demand, especially for iron ore, can exert pressure on the AUD.
– Global risk appetite has shifted to a more defensive stance over persistent geopolitical tensions and concerns about global growth.
– Lower risk tolerance in financial markets generally supports the USD at the expense of commodity-linked currencies like the AUD.
**Technical Chart Analysis**
– The most significant technical event has been the breach of the 200-day moving average, previously offering strong support around the 0.6580 level.
– AUD/USD also broke below the 50.0% Fibonacci retracement level from the October 2022 low to the December 2023 high, reinforcing bearish pressure.
– The next key support lies at the 0.6550 level, followed by 0.6525. A persistent move below these levels could pave the way for a new leg lower toward the 0.650
Read more on AUD/USD trading.