Australian Dollar Forecast: AUD/USD Approaches Monthly Low

Australian Dollar Outlook: AUD/USD

AUD/USD extends the decline from earlier this week to approach the monthly low (0.6419), but the exchange rate may track the flattening slope in the 50-Day SMA (0.6517) should it defend the rebound from the June low (0.6373).

Australian Dollar Forecast: AUD/USD Approaches Monthly Low

Keep in mind, AUD/USD gives back the advance from the start of the month after failing to test the July high (0.6625), and the exchange rate may continue to carve a series of lower highs and lows as China, Australia’s largest trading partner, keeps its benchmark interest rate at 3.00% in August.

It seems as though the People’s Bank of China (PBoC) is in no rush to further support the economy despite the ongoing trade negotiations with the Trump Administration, and the shift toward de-globalization may continue to cloud the outlook for the Asia/Pacific region as the Reserve Bank of Australia (RBA) warns that ‘there are uncertainties about the outlook for domestic economic activity and inflation stemming from both domestic and international developments.’

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In turn, the Australian Dollar may face additional headwinds ahead of the next RBA meeting in September as ‘monetary policy is well placed to respond decisively to international developments if they were to have material implications for activity and inflation in Australia,’ and the Kansas City Fed Economic Symposium in Jackson Hole, Wyoming may also sway AUD/USD amid the dissent within the Federal Open Market Committee (FOMC).

The event may reveal a growing rift within the FOMC as Governors Michelle Bowman and Christopher Waller preferred a 25bp rate-cut in July, but the majority may show a greater willingness to keep US interest rates higher for longer amid signs of persistent inflation.

With that said, hawkish remarks from Fed officials may fuel the recent decline in AUD/USD as it curbs speculation for an imminent rate-cut, but the exchange rate may attempt to negate the bearish price series should it hold above the monthly low (0.6419).

AUD/USD Price Chart – Daily

Chart Prepared by David Song, Senior Strategist; AUD/USD on TradingView  

• AUD/USD slips to a fresh weekly low (0.6424) as it carves a series of lower highs and lows, and a close below 0.6430 (50% Fibonacci retracement) may lead to a test of the June low (0.6373).
• A breach of the May low (0.6357) opens up 0.6310 (38.2% Fibonacci retracement), but AUD/USD may track the flattening slope in the 50-Day SMA (0.6517) should it hold above the monthly low (0.6419).
• Need a move/close above the 0.6510 (38.2% Fibonacci retracement) to 0.6550 (61.8% Fibonacci retracement) zone to bring the July high (0.6625) on the radar, with the next area of interest coming in around the November high (0.6688).

Additional Market Outlooks

Gold Price Falls Toward Monthly Low Ahead of Fed Symposium

Canadian Dollar Forecast: USD/CAD Rises amid Slowing Canada Inflation

GBP/USD Recovery Curbs Threat of Head-and-Shoulders Formation

US Dollar Forecast: EUR/USD Eyes Monthly High

--- Written by David Song, Senior Strategist

Follow on X at @DavidJSong