AUD/USD Back Down to 0.63 After Failing at the 50 Daily SMA

AUD/USD has been declining during these last three months mainly as a result of the stronger US currency but also due to the global uncertainties which have led traders away from risk assets, such as the major troubles that China’s economy has seen this year across a number of industries. Following another drop in Chinese Caixin services and manufacturing earlier this month, which drove the pair below 0.63, AUD/USD rallied early last week but it failed to reach and breach the resistance at 0.65.

Buyers ran into the 50 SMA (yellow) on the daily chart was also standing on the daily chart, which had acted as resistance in the last bullish attempt. This moving average held as resistance once again, rejecting the price despite being pierced and eventually, we saw a reversal lower.

The price fell around 150 pips lower to 0.63 lows in the following days, closing the week at the lows from early this month. The Reserve Bank of Australia held interest rates unchanged in the last two meetings, as predicted, since the present level of interest rates is causing inflation to return to goal, with core inflation decreasing, according to the most recent monthly CPI. The labor market is worsening as a result of a large miss in July and the majority of jobs gained in August are part-time. The Australian Manufacturing PMI also slipped deeper into contraction.

In the United States, on the other hand, the economic data has shown resilience in the economy in recent months. Inflation was predicted to fall slightly in September, with the headline annualized number falling to 3.6% from 3.7% in August. However, the data issued on Thursday revealed that headline CPI inflation remained at 3.7% on an annualized basis, giving the USD a lift and sending this pair down more than 100 pips. We are short on this pair and will sell retraces higher on smaller time-frame charts.

AUD/USD Live Chart