The AUD/USD pair experienced a sharp decline on Tuesday, consolidating below the 0.6400 area and heading towards its lowest daily close since November
, indicating a downward trend. The combination of weaker Australian Dollar following the Reserve Bank of Australia meeting and a stronger US Dollar has affected the pair. Australian data scheduled for Wednesday is expected to play a role in determining its direction.. The central bank reaffirmed its tightening bias but also emphasized downside economic risks. According to the RBA, inflation remains high but has reached its peak. The Australian Dollar weakened moderately following the meeting.
The Aussie faced additional pressure from the Chinese Caixin Services PMI, which dropped more than expected to 51.8 in August. These numbers fueled risk aversion and pushed AUD/USD below 0.6400. Prior to the Chinese data, the S&P Global Services PMI for Australia was revised upward from the preliminary figure of 46.7 to 47.8.
On Wednesday, Australia will release Q2 GDP data. Growth is expected to be 0.2% on a quarterly basis, with the annual rate at 1.7%, down from the 2.3% recorded in the first quarter. These figures are from Q2 and after the RBA meeting, so their impact may be limited. However, a negative surprise could strengthen the belief that theThe US Dollar strengthened on Tuesday amid cautious
, as US Treasury yields rose, with the 10-year yield reaching 4.26%. On Tuesday, the US ISM Services PMI is scheduled for release. Positive US data and a combination of risk aversion have the potential to push AUD/USD further downside.The AUD/USD pair dropped from the 20-day Simple Moving Average and reached as low as 0.6356, marking the lowest intraday level in nine months. It later trimmed some of its losses but was unable to reclaim the 0.6400 level.
In the 4-hour chart, the bias is clearly to the downside. A recovery above 0.6400 would alleviate bearish pressure and could indicate some consolidation. The Relative Strength Index is at oversold levels below 30, and Momentum is starting to turn to the upside, suggesting the possibility of a more consolidation ahead of the Asian session.
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