The AUD/USD currency pair continues its downward trajectory for the fifth consecutive day, reaching a one-and-a-half-week low near the 0.6500 level during early European trading on Tuesday. The persistent risk-off sentiment amid global economic uncertainties and a cautious stance from the Reserve Bank of Australia (RBA) have contributed to the Australian dollar’s decline, with neither party providing supportive cues to reverse the trend.
The RBA announced unchanged interest rates at 3.60%, aligning with expectations, but signaled that inflation remains notably high. The latest data revealed the Trimmed Mean Consumer Price Index increased by 1.0% in the September quarter, pushing the annual inflation rate to 3.0%. The bank also revised its inflation forecasts upward, indicating that core inflation is unlikely to return to the 2-3% target range before mid-2026. This outlook suggests that the RBA will maintain a cautious stance, discouraging hopes of immediate rate cuts, although market expectations suggest the easing cycle could be approaching its end.
Meanwhile, economic data from China added to regional concerns. China’s manufacturing PMI declined to 50.6 in October from 51.2 in September, signaling a slowdown. Official PMI data showed a similar trend, with the index dropping to 49.0, indicating contraction in industrial activity. These figures, coupled with diplomatic tensions—highlighted by China’s call for the US to avoid crossing “red lines”—have further undermined confidence in the China-dependent Australian dollar.
On the U.S. dollar front, a modest retreat was observed following a recent rally to its highest levels since early August. The dollar’s decline was limited, however, by the Federal Reserve’s stance. Fed Chair Jerome Powell recently indicated that further policy easing is not inevitable, reinforcing expectations of a hawkish outlook. This has lent strength to the US dollar, countering attempts by the AUD to recover.
From a technical perspective, a break below key support levels around 0.6520-0.6525 could accelerate downside moves towards 0.6480 and potentially lower, toward the 200-day moving average near 0.6445. Conversely, a sustained move above resistance levels around 0.6535-0.6540 would be needed to trigger a reversal, paving the way toward 0.6600 and potentially testing recent highs near 0.6620. The overall tone remains bearish unless the pair finds meaningful support or momentum shifts unexpectedly.
