AUD/USD Under Pressure Amid Global Trade Tariff Concerns

Market Overview

The AUD/USD pair faces downward pressure as a result of recent geopolitical and economic developments. The announcement by U.S. President-elect Donald Trump regarding a 10% tariff on Chinese goods, along with a 25% tariff on imports from Mexico and Canada, has heightened global trade tensions. This escalation has led to increased demand for safe-haven assets like the U.S. dollar, subsequently putting pressure on the Australian dollar (AUD) against the greenback.

Additionally, recent communications from the Reserve Bank of Australia (RBA) reflect a cautious stance on monetary policy. Despite the Consumer Price Index (CPI) easing to 2.1% in September and annual inflation decreasing to 2.8% in the third quarter, the RBA emphasized that a single positive quarter of data is insufficient to justify any rate cuts. This conservative stance, combined with a weakening global outlook, has further dampened sentiment around the AUD/USD pair.

Technical Analysis

In the 4-hour chart, AUD/USD continues to maintain a downtrend. The pair attempted to recover but encountered resistance at the middle Bollinger Band and the 100-period Weighted Moving Average (WMA), ultimately failing to break through. Following this rejection, the price dropped below the 100% Fibonacci level at 0.64712, confirming the sellers’ control. The recent touch on the 61.8% Fibonacci resistance at 0.65011 and subsequent inability to surpass it indicate persisting weakness among buyers.

The current price stands around 0.64800, while the Bollinger Bands suggest a contraction, signaling reduced recent volatility. The price has moved towards the lower Bollinger Band, which is now expanding downwards, suggesting intensified selling pressure and heightened potential for increased volatility.

The 100-period WMA acts as a significant resistance above the current price, likely playing a key role in containing any potential upward movements. Should selling pressure persist and the 0.64712 support level break, the downward movement could extend to the following support levels: the 127.2% Fibonacci at 0.64499, 141.4% at 0.64387, and the 161.8% Fibonacci level at 0.64227. Continued bearish momentum could drive the price towards the lower 200% Fibonacci extension level.

Momentum Oscillators Analysis

The Relative Strength Index (RSI) is currently at 43.74, below the neutral 50 mark, signaling selling pressure and an advantage for the bears. Although the RSI is approaching potential support around the 40 level, there is no significant buying momentum evident at present. Similarly, the Moving Average Convergence Divergence (MACD) is in the negative zone, with both the MACD and signal lines trending downward. The histogram remains largely unchanged, indicating weak momentum and reinforcing the dominance of sellers.

Alternative Scenario

A bullish reversal scenario would require a sustained break above the 61.8% Fibonacci resistance level at 0.65011. If the price manages to clear this hurdle, a move towards the higher resistance at 0.65496 could follow. Overcoming this resistance would indicate a potential shift to an upward trend.

Key Levels – Support and Resistance

• Resistance 2: 0.65496
• Resistance 1: 0.65011
• Current Price: 0.64800
• Support 1: 0.64712
• Support 2: 0.64499
• Support 3: 0.64387
• Support 4: 0.64227

Key Events to Watch

On Tuesday, November 26, multiple significant economic events from the United States will have an impact on the AUD/USD pair. One such data point is the Consumer Confidence Index, projected at 111.8, an improvement from the previous 108.7 figure. If this optimism is realized, it could further strengthen the U.S. dollar. Additionally, new home sales are expected to rise by 4.1% monthly, which would suggest a recovering housing sector and stronger economic growth in the U.S.

Moreover, the Federal Open Market Committee (FOMC) meeting minutes are also scheduled for release, potentially providing insights into the future path of U.S. monetary policy. Any indication of further tightening could put additional pressure on the Australian dollar and bolster the greenback, thereby pushing AUD/USD lower.

Conclusion

The bearish trend for AUD/USD remains intact unless the pair can sustain above 0.65011. Persistent downward pressure suggests potential tests of lower Fibonacci levels, while muted momentum across oscillators underscores a lack of buyer enthusiasm. The path ahead for AUD/USD will likely be influenced by U.S. economic data and FOMC minutes, with any hawkish signs potentially exacerbating the downward move.