**AUD/USD Forecast: Aussie Dollar Faces Headwinds Amid Global Uncertainty**
*Credit: Original analysis by Valeria Bednarik, Chief Analyst at FXStreet, as published on Mitrade.*
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### Overview
The Australian Dollar (AUD) continues to face significant headwinds against the US Dollar (USD), with global macroeconomic forces pushing the pair lower. As investor sentiment wavers and risk aversion rises, the AUD/USD pair remains vulnerable to further declines. This article examines the key factors impacting the pair, technical outlooks, and the prospects for future movement, based on the original analysis by Valeria Bednarik.
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### Recent Market Performance
After starting the week on a muted note, AUD/USD experienced renewed selling pressure, falling to new multi-month lows. Despite isolated attempts to recover, the pair failed to sustain any significant upward momentum, underscoring the dominance of bearish sentiment.
– **AUD/USD traded as low as 0.6300, closing the week near these levels**
– **The pair saw mild rebounds, but sellers quickly returned near the 0.6350 resistance zone**
– The USD index (DXY) hovered near 106.50, maintaining underlying strength
– Australian and global equities posted choppy, risk-averse performances, with the ASX 200 encountering turbulence amid global uncertainty
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### Macro Drivers: Why Is the Aussie Under Pressure?
Several major factors weigh on the AUD/USD outlook, each amplifying bearish sentiment:
**1. Rising US Yields**
The Fed’s persistent hawkish stance, repeated by officials in speeches and the most recent FOMC minutes, continues to drive US Treasury yields higher.
– The US 10-year yield surged near 5%, its highest level in 16 years
– Higher yields attract foreign capital flows into USD-denominated assets, pushing the greenback higher
– Yield differentials between Australian and US bonds have widened in favor of the USD, further pressuring the AUD
**2. Dovish RBA and Domestic Uncertainty**
The Reserve Bank of Australia (RBA) maintained a cautious, broadly dovish outlook at its most recent meeting.
– RBA minutes revealed concerns over weak domestic demand, sluggish wage growth, and cooling inflationary pressures
– The central bank signaled no rush to hike rates further, contrasting sharply with the Fed’s tightening bias
– Australian employment data disappointed, with the jobless rate ticking higher and employment growth losing momentum
**3. Soft Chinese Data and China Exposure Risks**
Australia’s currency has long been seen as a proxy for China exposure, due to close trade ties, especially in commodities.
– Chinese Q3 GDP missed forecasts, stoking renewed concerns about the country’s economic recovery
– China’s property sector remains under stress, with negative spillover risks for Australia’s iron ore exports
– Sentiment soured further as Chinese retail sales, industrial production, and fixed asset investment all disappointed
– Weak demand from China undermines Australia’s terms of trade, dragging the AUD lower
**4. Risk-Off Market Sentiment**
Global risk appetite has soured amid multiple points of geopolitical and economic uncertainty.
– Ongoing tensions in the Middle East, particularly the Israel-Gaza conflict, have further increased risk aversion
– Global equities retreated, supporting defensive flows into the US Dollar
– Volatility gauges ticked higher, reflecting the market’s nervous tone
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### Technical Analysis: AUD/USD Faces Struggle at Key Levels
Technical indicators for the AUD/USD pair suggest a continuation of the bearish bias, at least in the near term.
**1. Daily Chart Overview**
– The pair is trading comfortably below the key 200-day Simple Moving Average (SMA), which is sloping lower and acting as dynamic resistance
– Oscillators on the daily chart point downward, with the Relative Strength Index (RSI) near oversold territory (just above 30), indicating persistent bearish momentum but also the potential for brief corrective rebounds
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