- China unexpectedly cut rates to spur economic growth.
- The economic situation in China remains bleak.
- This week, investors will focus on PMI, GDP and inflation data from the US.
The AUD/USD price analysis shows massive bearish momentum as the Aussie suffers after unexpected rate cuts by the People’s Bank of China. Meanwhile, investors were gearing up for more inflation data from the US that will affect Fed rate cut expectations.
–Are you interested in learning more about Forex indicators? Check our detailed guide-
On Monday, China unexpectedly cut rates to spur economic growth after data for the second quarter reflected poor economic performance. The last time the country made such a move was in August last year. The move led to a sharp decline in the Aussie, which reflects the Yuan.
The economic situation in China remains bleak. The property crisis continues, and the country is verging on disinflation. Therefore, top officials met and decided the best move was to lower borrowing costs.
Meanwhile, the Aussie has fallen since its rally on Thursday last week when Australia’s employment showed a jump in jobs. Since then, the currency has been vulnerable to dollar and yuan moves. Notably, the dollar recovered towards the end of the week amid safe-haven inflows. The unexpected cyber outage on Friday hurt risk sentiment, pushing the Aussie lower. On the other hand, the dollar rallied, ending a period of weakness caused by an increase in Fed rate cut expectations.
This week, investors will focus on PMI, GDP, and inflation data from the US. On Friday, the focus will be on the core PCE price index, which might show a 0.2% increase. This forecast is bigger than the previous increase of 0.1%. A smaller-than-expected figure would confirm the downtrend in inflation.
AUD/USD key events today
No high-impact reports will come from Australia or the US today. Consequently, the price might extend Monday’s move.
AUD/USD technical price analysis: Solid bearish momentum charges for 0.6600 support
On the technical side, the AUD/USD price is in freefall and recently broke below the 0.6640 support level. The price has steeply declined since it broke below and retested its bullish trendline.
–Are you interested in learning more about Best Bitcoin Exchanges? Check our detailed guide-
The decline has been sharp, breaking below support levels with few shallow pauses. Consequently, the bearish bias is strong. The next target for this decline is at the 0.6600 support level. Here, the price might pause for a pullback before the downtrend continues.
Looking to trade forex now? Invest at eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Share
Saqib Iqbal
