AUD/USD is under downside pressure below 0.6510 as RBA looms

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<li><strong>In the past three weeks, AUD/USD has been trading within a minor range configuration between 0.6510 and 0.6385.</strong></li>
<li><strong>Price actions have been dictated primarily from external factors especially economic news flow out from China.</strong></li>
<li><strong>Consensus is expecting another third consecutive month of no change in the policy cash rate at 4.1% in today’s RBA monetary policy decision.</strong></li>
<li><strong>The medium-term trend of AUD/USD remains bearish below its 50-day moving average now acting as a resistance at 0.6600 and 0.6510 remains the key short-term resistance to watch.</strong></li>
</ul>
<p>This is a follow-up analysis of our prior report, <em>“Potential minor countertrend rebound in progress”</em> published on 28 August 2023. Click here for a <a href="https://marketpulse.com/forex/aud-usd-technical-potential-minor-countertrend-rebound-in-progress/kwong">recap</a>.</p>
<p>Since its minor range swing low of 0.6338 printed on 17 August 2023, the price actions of<a href="https://www.oanda.com/sg-en/trading/instruments/aud-usd/"> AUD/USD</a> have been primarily driven by external factors; especially economic news flow out from China as Australia’s commodities producers/trading firms are dependent on either direct or indirectly on the fortunes of the currently cash-stripped Chinese property developers.</p>
<p>In the past week, the AUD/USD has rallied as expected and hit the 0.6510 countertrend rebound resistance, it printed an intraday high of 0.6522 last Wednesday, 30 August before upside momentum fizzled out to trade back down within its minor range configuration in place since 17 August 2023.</p>
<p>In the past two trading sessions, the price actions of AUD/USD have been whipsawed around its downward-slopping 20-day moving average as we await the outcome of the key RBA monetary policy decision out later today at 0430 GMT.</p>
<p>Today’s RBA monetary policy meeting will be the last one chaired by the current Governor Phillip Lowe before he hands over the reins to Michele Bullock, an RBA “lifer” since 1985. In the run-up to today’s meeting, the consensus is expecting another third consecutive month of no change in the policy cash rate at 4.1% as the recently released monthly CPI indicator for July has slowed to 4.9% y/y from 5.4% y/y in June, its slowest pace of increase since February 2022 and below consensus of 5.2% y/y.</p>
<p>Interestingly, the ASX 30-day interbank cash rate futures on the September 2023 contract have indicated a 14% chance of a 25-basis point cut on the cash rate to 3.85% for today’s RBA meeting based on data as of 4 September 2023. That’s a slight increase in odds from a 12% chance of a 25-bps rate cut inferred a week ago.</p>
<p>Let’s now examine the AUD/USD from the lens of technical analysis.</p>
<h2><strong>Medium-term momentum remains bearish</strong></h2>
<p><a href="https://www.marketpulse.com/wp-content/uploads/2023/09/AUDUSD_2023-09-05_08-28-27.png"><img loading="lazy" class="alignnone wp-image-807358 size-large" src="https://www.marketpulse.com/wp-content/uploads/2023/09/AUDUSD_2023-09-05_08-28-27-1024×589.png" alt="" width="700" height="403" srcset="https://www.marketpulse.com/wp-content/uploads/2023/09/AUDUSD_2023-09-05_08-28-27-1024×589.png 1024w, https://www.marketpulse.com/wp-content/uploads/2023/09/AUDUSD_2023-09-05_08-28-27-300×172.png 300w, https://www.marketpulse.com/wp-content/uploads/2023/09/AUDUSD_2023-09-05_08-28-27-768×442.png 768w, https://www.marketpulse.com/wp-content/uploads/2023/09/AUDUSD_2023-09-05_08-28-27-1536×883.png 1536w, https://www.marketpulse.com/wp-content/uploads/2023/09/AUDUSD_2023-09-05_08-28-27.png 1701w" sizes="(max-width: 700px) 100vw, 700px" /></a></p>
<p>Fig 1:  AUD/USD medium-term trend as of 5 Sep 2023 (Source: TradingView, click to enlarge chart)</p>
<p>Since the bearish breakdown of the AUD/USD below its former medium-term ascending trendline support from the 13 Oct 2022 swing low on 11 August 2023, its price actions have continued to thread lower below its downward-sloping 50-day moving average now acting as a key medium-term resistance at 0.6600 which also confluences with the former swing low of 29 June/6 July 2023 where the bulls got rejected on 4 August and 10 August 2023 after attempts to break above it.</p>
<p>Also, the daily RSI indicator, a measurement of momentum has managed to stage a retreat right after a retest on former parallel ascending support now turns pull-back resistance right below the 50 level in the past week which indicates the revival of medium-term bearish momentum that advocates further potential downside pressure in the price actions of AUD/USD going forward.</p>
<h2><strong>0.6510 is the key short-term resistance to watch on the AUD/USD </strong></h2>
<p><a href="https://www.marketpulse.com/wp-content/uploads/2023/09/AUDUSD_2023-09-05_08-34-47.png"><img loading="lazy" class="alignnone wp-image-807359 size-large" src="https://www.marketpulse.com/wp-content/uploads/2023/09/AUDUSD_2023-09-05_08-34-47-1024×589.png" alt="" width="700" height="403" srcset="https://www.marketpulse.com/wp-content/uploads/2023/09/AUDUSD_2023-09-05_08-34-47-1024×589.png 1024w, https://www.marketpulse.com/wp-content/uploads/2023/09/AUDUSD_2023-09-05_08-34-47-300×172.png 300w, https://www.marketpulse.com/wp-content/uploads/2023/09/AUDUSD_2023-09-05_08-34-47-768×442.png 768w, https://www.marketpulse.com/wp-content/uploads/2023/09/AUDUSD_2023-09-05_08-34-47-1536×883.png 1536w, https://www.marketpulse.com/wp-content/uploads/2023/09/AUDUSD_2023-09-05_08-34-47.png 1701w" sizes="(max-width: 700px) 100vw, 700px" /></a></p>
<p>Fig 2:  AUD/USD minor short-term trend as of 5 Sep 2023 (Source: TradingView, click to enlarge chart)</p>
<p>If the 0.6510 key short-term pivotal resistance is not surpassed to the upside and a breakdown below the intermediate minor support of 0.6440, the AUD/USD may see a further slide to retest the minor range support of 0.6385. Thereafter, a break with a daily close below 0.6385 may kickstart another leg of a potential impulsive down move sequence within its medium-term downtrend phase to expose the next support at 0.6310 in the first step.</p>
<p>On the flip side, a clearance above 0.6510 negates the bearish tone for a squeeze-up to see the 0.6600 medium-term resistance next.</p>