AUD/USD flirts with 50-day SMA, looks vulnerable near multi-week low ahead of FOMC minutes

• AUD/USD is trading in a negative bias for the fifth day in a row amid modest USD strength.
• Disappointment over China’s stimulus upgrade puts further pressure on the Aussie.
• Traders are now looking to the FOMC minutes for a short-term boost ahead of US inflation numbers.

The AUD/USD pair is attracting fresh sellers following an intraday rally in the 0.6760 area and moving into negative territory for the fifth consecutive day on Wednesday. Spot prices are falling to the 0.6725-0.6720 region in the first half of the European session, closer to a more than three-week low hit on Tuesday, with bears flirting with the 50-day simple moving average (SMA).

The Australian dollar (AUD) continues to be undermined by disappointment over China’s stimulus upgrade, which, along with a modest rise in the US dollar (USD), is putting some downward pressure on the AUD/USD pair. China’s National Development and Reform Commission said on Tuesday that the economy was facing more complex domestic and external environments and also did not announce any major new stimulus plans. This, to a greater extent, overshadowed a relatively sober record from the Reserve Bank of Australia’s (RBA) September meeting.

Meanwhile, investors were betting on more aggressive policy easing by the Federal Reserve (Fed) and an excessive interest rate cut in November amid signs of a still resilient US labor market. That keeps the benchmark 10-year U.S. Treasury yield above the 4 percent mark and the USD index ( DXY ), which tracks the greenback against a basket of currencies, near a seven-week high hit last Friday. Apart from that, a generally weaker tone around equity markets is benefiting safe-haven money and weighing on the risk-sensitive Aussie.

The fundamental backdrop supports the prospects for an extension of AUD/USD’s recent slide back from the February 2023 high around the 0.6940-0.6945 region reached last month. However, bearish traders appear reluctant and prefer to wait for more clues about the Fed’s rate cut path before placing new bets. Market focus will therefore be glued to the release of the minutes of the FOMC meeting later this Wednesday, which will be followed by the US Consumer Price Index (CPI) and the Producer Price Index (PPI) on Thursday and respectively , Friday.