The AUD/USD is in the midst of a bearish correction phase. This came after its all-time high of 0.6707 versus the US Dollar (USD) on Wednesday. The AUD/USD 4-hour chart has exhibited developing bearish pressure, making the currency’s recent decline more apparent. Market participants are getting ready for the new September Purchasing Managers’ Index (PMI) data. At the same time, a rising AUD against all major currencies is raising questions about its future direction.
As of this writing, the AUD/USD has just recently broken down through an important bullish support trendline just above the 0.6600 level. The drop is especially significant when it falls below the 100-period Simple Moving Average (SMA). Currently, that average is 0.6593. Nationwide, analysts are tracking these exciting developments. Should the crypto pair manage to close under these levels for a week, it may likely mean a deeper bearish trend.
Current Market Position
Currently, the AUD/USD is showing an overall percentage change of -0.34% vs the USD. This decrease is indicative of a larger picture as the Australian dollar faces similar increases/decreases in value against other major world currencies. In particular, it is indicating a -0.10% move versus the Euro (EUR) and a -0.53% move against the Japanese Yen (JPY). One other thing to note, the AUD has made a comeback over the past few weeks. It’s up 0.17% vs British Pound (GBP), 0.34% vs Canadian Dollar (CAD), 0.21% vs New Zealand Dollar (NZD) and 0.09% vs Swiss Franc (CHF).
There are many economic factors behind the rise and fall of the AUD. Changes in the global economic landscape and a turn in monetary policy by the Reserve Bank of Australia (RBA) have been instrumental in this phenomenon. With recent data indicating that “manufacturing activity has returned to a pace of expansion not seen since September 2022,” there is a sense of cautious optimism about the Australian economy’s resilience.
Implications of Economic Data
These latest developments, together with the key economic releases coming up for September will largely determine how the market starts to think about the Australian economy. Economists suggest that a continuation or improvement in economic levels would reinforce the perception of a robust economy, thereby potentially supporting the AUD against its peers.
While market expectations continue to build in anticipation of these releases, analysts are smartly waiting on the sidelines for what those might entail. Ongoing robust manufacturing activity, especially propelled by new orders from the big three—USA, Europe and Asia-Pacific. This development might provide significant tailwinds for the AUD in the near-term.
Any economic indicator pointing to a deterioration or at best stasis of the economic recovery will surely trigger renewed bearish howls. Consequently, this could put downward pressure on the AUD/USD exchange rate. Traders are therefore encouraged to keep their ears to the ground for any tidbits that can shift market sentiment.
Looking Ahead
Over the next few days, traders will be looking to catch a break in the AUD/USD as it tests key support levels on their way down. Analysts, including Deutsche Bank, forecast the Aussie could first fall to 0.6580. If the bearish momentum does persist, the next major swing low around 0.6560 may provide some support.
The RBA has drastically reversed course on its monetary policy. Changes in BoC’s forward-looking tone may be at least as important on where the AUD moves next. Signs suggest a changing approach from the RBA. Indications suggest a new approach. Thus, any positive announcements or guidance from their new officials would rapidly translate into improvements in market sentiment and currency value.