A further decline targets the 0.6630 region

• AUD/USD fell for the fourth session in a row and neared 0.6700.
• The US dollar kept trading in a range near recent highs.
• The minutes of the RBA’s September meeting entered the conciliatory side.

AUD/USD remained bearish on Tuesday, retreating for a fourth straight session on weak US dollar (USD) advances, dovish RBA minutes and a lack of fresh news from the recently announced stimulus measures in China.

Against this, the pair approached key support around 0.6700, a region where the intermediate 55-day and 100-day SMAs are also converging.

The decline in the Australian dollar followed an inconclusive trend among other risk-sensitive currencies, despite the lack of clear movement in the greenback. This came as traders continued to assess the path of Fed rates as well as lingering geopolitical tensions in the Middle East.

Lower copper and iron ore prices further weighed on the AUD amid lingering doubts about China’s recent stimulus measures, particularly those aimed at boosting the property sector.

On the monetary front, the Reserve Bank of Australia (RBA) kept its cash rate steady at 4.35% at its September meeting. While acknowledging inflation risks, Gov. Michele Bullock noted that a rate hike has not been seriously considered.

On Tuesday, the RBA published its minutes suggesting a conciliatory shift as the bank scrapped guidance from its August meeting, which said the cash rate target was unlikely to be cut in the near term.

Despite this, RBA Deputy Governor Andrew Hauser later rejected the “dovish” characterization of the September Minutes, stressing that the bank’s work to reduce inflation was “not yet done”.

Markets currently have a 55% chance of a 25 basis point interest rate cut by the end of the year, with the RBA expected to be among the last G10 central banks to cut rates, likely in response to slowing economic activity and reducing inflationary pressures.

While the Federal Reserve’s interest rate cuts are already set, they could see further gains in 2024. However, uncertainty remains about China’s economic outlook and how effectively its stimulus efforts will be implemented.

In terms of positioning, the latest CFTC report showed that speculators held net long positions in AUD for the first time since July, beginning in the week ending October 1. This came alongside a notable increase in open interest, with AUD/USD retrieving the area above. 0.6900 for the first time since February 2023 in this period.

AUD/USD Daily Chart

AUD/USD Short-Term Technical Outlook

Further losses may push AUD/USD to retest the intermediate 55-day and 100-day SMAs of 0.6705 and 0.6688, respectively, ahead of the September low of 0.6622 (September 11), which is still supported of the crucial 200-day SMA ( 0.6626).

Furthermore, the first barrier appears at the 2024 high of 0.6942 (September 30), ahead of the important 0.7000 milestone.

The four-hour chart shows an uptrend. Having said that, the initial support is 0.6714 followed by 0.6622. On the upside, the 200-SMA at 0.6781 is ahead of 0.6809 and the 100-SMA at 0.6831. The RSI has dropped to around 29.