Current trend

The AUD/USD pair is showing a confident decline, developing a strong "bearish" momentum formed in the short term. The instrument is testing the level of 0.6585 for a breakdown, updating local lows from August 15.

The American currency is moderately supported by forecasts regarding a slowdown in the pace of monetary easing in the United States. Earlier, US Federal Reserve Chairman Jerome Powell warned markets against getting their expectations too high after cutting interest rates by 50 basis points in September, and against this backdrop, analysts revised their preliminary estimates for the November meeting. The Chicago Mercantile Exchange (CME Group) FedWatch Tool now shows an 85.0% chance of a –25-basis-point adjustment, with another –25-basis-point change possible in December. An additional factor of support for the American currency is the possible victory of Donald Trump in the presidential elections, which will take place on November 5. The Republican Party representative is expected to sharply tighten tariff policy, as well as to slow down the cost of borrowing cuts.

Australian inflation data is due out at 02:30 (GMT 2) on Wednesday, with markets expecting the consumer price index to slow in the third quarter from 3.8% to 2.9% year-on-year and from 1.0% to 0.3% quarter-on-quarter, putting significant pressure on the currency as it increases the potential for monetary easing by the Reserve Bank of Australia (RBA). Core inflation, which is calculated using the trimmed mean method, is likely to decline in the third quarter from 3.9% to 3.5% year-on-year and from 0.8% to 0.7% quarter-on-quarter.

Meanwhile, the regulator posted a fourth consecutive loss of 2.8 billion US dollars for the year ended June 30, as the yield on the RBA's holdings of bonds and other assets acquired during the COVID-19 pandemic lagged far behind the interest paid to commercial savers, putting pressure on its budget. The 2023-2024 deficit brings the total loss caused by the extraordinary stimulus measures to 51.2 billion dollars.

Support and resistance

Bollinger Bands on the daily chart show a steady decline. The price range is expanding, but at the moment it is not keeping up with the surge of "bearish" sentiment. MACD is going down preserving a moderate sell signal (located below the signal line). Stochastic maintains a similar downward direction, but is currently located near its lows, indicating the risks of oversold Australian dollar in the ultra-short term.

Resistance levels: 0.6600, 0.6622, 0.6650, 0.6675.

Support levels: 0.6568, 0.6540, 0.6500, 0.6456.

Trading tips

Short positions may be opened after a breakdown of 0.6568 with the target at 0.6500. Stop-loss — 0.6600. Implementation time: 1-2 days.

A rebound from 0.6568 as from support followed by a breakout of 0.6600 may become a signal for opening new long positions with the target at 0.6650. Stop-loss — 0.6568.