News
7x24
Quotes
Economic Calendar
Video
Data
- Names
- Latest
- Prev.
AUD/USD Slips Below Key Support Amid Rising USD Yields and Trade Tensions
Economic
Summary:
The AUD/USD pair started the week on a weaker note, falling below the 0.6500 mark due to a pickup in USD demand, higher US bond yields, and ongoing concerns over the US-China trade tensions.
Sell
TradingAUDUSD
EXP
0.64900
Entry Price
0.63550
TP
0.65600
SL
0.64256 -0.00598 -0.92%
0
Point
Flat
0.63550
TP
CLOSING
0.64900
Entry Price
0.65600
SL
The Australian Dollar (AUD) began the week on a weaker note, with the AUD/USD pair sliding below the critical 0.6500 psychological level during the Asian session on Monday. This marked the end of a three-day winning streak, as the greenback strengthened, supported by a confluence of factors that continue to weigh on the Aussie.
The most immediate catalyst for the AUD’s weakness was a solid pickup in demand for the US Dollar (USD), which saw increased flows as traders adjusted their expectations regarding the Federal Reserve's rate policy. As the market recalibrated its outlook on future interest rate cuts by the Fed, the anticipation of a slower pace of easing lifted US Treasury bond yields. This, in turn, provided significant support to the USD, with investors flocking to the safe-haven currency.
The increasing divergence between US monetary policy and the more dovish stance of the Reserve Bank of Australia (RBA) is further straining the AUD. While the RBA has maintained a hawkish tilt in its rhetoric, concerns about the global economy and persistent geopolitical risks have overshadowed any support this might have offered the Aussie. In particular, the ongoing uncertainty around the US-China trade relations, especially as fears of a second wave of the trade war have resurfaced, continue to pressure the AUD, a currency often viewed as a proxy for China’s economic health.
With President-elect Donald Trump’s post-election promises to levy significant tariffs on key trading partners, including China, the market is bracing for potential disruptions in trade that could hurt Australia’s export-driven economy. Trump’s aggressive trade stance, which includes threats of a 100% tariff on BRICS nations (Brazil, Russia, India, China, and South Africa) should they replace the USD in international transactions, has amplified the risks for the AUD.
Beyond trade war concerns, persistent geopolitical tensions, particularly the protracted Russia-Ukraine war, are also contributing to USD strength. As these risks continue to loom over the global economy, demand for the US Dollar has seen a revival. This helped the USD recover from a nearly three-week low last Friday, further cementing its safe-haven status amid broader market uncertainty.
The uptick in US Treasury bond yields has been particularly important in shaping the direction of the AUD/USD pair. With the market pricing in the potential for a slower pace of rate cuts from the Federal Reserve, US bond yields have started to climb again, making the greenback more attractive to investors seeking higher returns. These rising yields, combined with broader concerns over global trade tensions, have kept the USD well-supported and the AUD under pressure.
Over the weekend, China’s official Manufacturing Purchasing Managers' Index (PMI) showed a slight improvement, rising to 50.3 in November from 50.1 in October. However, the NBS Non-Manufacturing PMI eased to 50.0, suggesting that the services sector in China is losing momentum. Despite this, the Caixin Manufacturing PMI for November saw a significant jump, climbing to 51.5 from 50.3, indicating that private-sector activity is showing more resilience.
While there is hope in the market that the Chinese government will introduce additional stimulus to support domestic demand, these data points have done little to sway investors. The response in the AUD has been tepid, reflecting broader concerns about the Australian economy’s exposure to the fallout from a potential US-China trade war. With the Chinese economy showing signs of slowing down and uncertainties surrounding future stimulus measures, the outlook for the AUD remains bleak.
Technical Analysis
From a technical standpoint, the AUD/USD pair has encountered resistance at the upper boundary of a bearish channel. This has triggered a rebound that suggests a resumption of the recent downtrend that has been in place for the past two months. The pair is expected to continue lower in the short-term, with key support levels at 0.6440 and 0.6355.
The bearish trend is expected to dominate the short-term outlook, unless the pair manages to break above the 0.6530 resistance level, which could prompt a bullish correction. However, given the prevailing fundamental backdrop—strong USD demand, geopolitical risks, and global economic uncertainties—the downside risks appear to outweigh any potential bullish correction.
The trading range for today is seen between 0.6440 support and 0.6540 resistance, with the primary bias remaining bearish.
TRADE RECOMMENDATION
SELL AUDUSD
ENTRY PRICE: 0.6490
STOP LOSS: 0.6560
TAKE PROFIT: 0.6355
Risk Warnings and Investment Disclaimers
You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or strategy, or any other product is suitable for you based on your investment objectives and financial situation.
Quick Access to 7x24
Quick Access to More Editor-selected Real-time News
Exclusive video for free
FastBull project team is dedicated to create exclusive videos
Real-time Quotes
View more faster market quotes
More comprehensive macro data and economic indicators
Members have access to entire historical data, guests can only view the last 4 years
Member-only Database
Comprehensive forex, commodity, and equity market data
English
English
العربية
繁體中文
简体中文
Bahasa Melayu
Bahasa Indonesia
ภาษาไทย
Tiếng Việt
Copyright © 2024 FastBull Ltd
Home News Columns 7x24 Economic Calendar Quotes Video Data WarehouseAnalysis AI Signal Pro User Agreement Privacy Policy About Us
Risk Disclosure
The risk of loss in trading financial assets such as stocks, FX, commodities, futures, bonds, ETFs or crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.
No consideration to invest should be made without thoroughly conduct your own due diligence, or consult with your financial advisors. Our web content might not suit you, since we have not known your financial condition and investment needs. It is possible that our financial information might have latency or contains inaccuracy, so you should be fully responsible for any of your transactions and investment decisions. The company will not be responsible for your capital lost.
Without getting the permission from the website, you are not allow to copy the website graphics, texts, or trade marks. Intellectual property rights in the content or data incorporated into this website belongs to its providers and exchange merchants.