Aussie dollar extends losses for fourth straight session
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Daily Currency Update
The AUDUSD pair continued to face selling pressure for a fourth consecutive session on Tuesday, with the exchange rate hovering around the US$0.6633 level at the time of writing. The persistent downside reflects a combination of renewed US Dollar strength and cautious sentiment surrounding the Australian economy, keeping buyers on the defensive.The US dollar has found fresh support as investors reassess the outlook for interest rates in the United States. Recent economic data have reinforced expectations that the Federal Reserve may keep borrowing costs higher for longer, reducing the appeal of risk-sensitive currencies such as the Australian dollar. As a result, the Greenback has remained well bid, weighing steadily on the AUDUSD pair.
Adding to the pressure, US Treasury yields have edged higher, increasing the relative attractiveness of dollar-denominated assets. This yield advantage has encouraged capital flows into the US dollar, making it more difficult for the Australian dollar to regain lost ground. Market participants remain cautious ahead of upcoming US economic releases, which could further shape expectations for monetary policy in the months ahead.
On the Australian side, sentiment has been mixed. While domestic data have shown some resilience, concerns persist about the broader growth outlook. Australia’s close trade ties with China also continue to influence the AUD. Ongoing uncertainty surrounding China’s economic recovery has limited enthusiasm for the currency, as investors remain alert to any signs of slowing demand from Australia’s largest trading partner.
Commodity prices, another key driver for the Australian dollar, have also failed to provide strong support. Although prices for key exports have stabilised, they have not delivered enough momentum to offset the prevailing US dollar strength. This has kept the AUDUSD pair under pressure and restricted any meaningful rebound.
From a technical perspective, the pair remains below key short-term moving averages, reinforcing the bearish tone in the near term. The inability to hold above recent support levels has encouraged sellers to stay active, with traders now watching whether the US$0.6600 psychological mark could come into focus if downside momentum persists.
Looking ahead, traders will closely monitor upcoming economic data from both the US and Australia, as well as comments from central bank officials. Any shift in expectations around interest rates or growth prospects could trigger a change in direction. For now, however, the AUDUSD pair appears vulnerable, with the balance of risks tilted to the downside as long as the pair remains below recent resistance levels.
Key Movers
The US Dollar Index (DXY), which measures the Greenback against a basket of major currencies, continues to hover near its lowest level since October 7, reflecting growing expectations that the Federal Reserve will deliver additional interest rate cuts in the coming months. These shifting rate expectations have kept the US dollar on the back foot and provided some underlying support to risk-sensitive currencies, including the Australian dollar.Market sentiment toward the US dollar has softened as investors increasingly price in a more accommodative policy outlook from the Fed. Recent economic signals have pointed to cooling inflation and a gradual slowdown in economic activity, strengthening the case for lower borrowing costs. As a result, demand for the Greenback has eased, allowing currencies such as the Australian dollar to gain some breathing room.
Adding to the pressure on the US dollar are ongoing discussions around the future leadership of the Federal Reserve. Expectations that the eventual replacement of Fed Chair Jerome Powell could lean more dovish have reinforced the view that US monetary policy may become more supportive of growth rather than restrictive. This outlook has further limited upside momentum for the US dollar and acted as a potential tailwind for the AUD/USD pair.
Despite the softer tone in the US dollar, traders appear cautious and are refraining from placing aggressive directional bets. Attention is firmly focused on a busy macroeconomic calendar, starting with the delayed US Nonfarm Payrolls report for October. The closely watched employment data could provide important clues about the health of the US labour market and influence expectations around the timing and scale of future Fed rate cuts.
In the meantime, market participants are opting to stay on the sidelines, waiting for clearer signals before committing to new positions. This hesitation has resulted in relatively subdued price action in major currency pairs, including AUDUSD, as traders seek confirmation from hard data rather than relying solely on policy speculation.
From a technical perspective, the AUDUSD pair has been trading within an upward trend that has been in place for around three weeks. However, the recent lack of strong follow-through selling suggests that this uptrend may not yet be exhausted. Analysts note that a decisive break below key support levels, accompanied by increased selling volume, would be needed to confirm a shift in near-term momentum.
Looking ahead, the direction of the AUDUSD pair is likely to depend on incoming US economic data and how it shapes expectations for Federal Reserve policy. If the data reinforce the case for rate cuts, the US dollar could remain under pressure, supporting the AUD. Conversely, any upside surprises in employment or inflation could offer the Greenback some relief.
For now, patience appears to be the dominant theme. With major data releases on the horizon, traders may prefer to wait for clearer confirmation before concluding that the AUD/USD pair’s recent uptrend has run out of steam.
Expected Ranges
- AUD/USD: 0.6550 - 0.6750 ▼
- AUD/EUR: 0.5550 - 0.5750 ▼
- GBP/AUD: 2.0150 - 2.0350 ▲
- AUD/NZD: 1.1350 - 1.1550 ▲
- AUD/CAD: 0.9000 - 0.9200 ▼