AUD/USD bears await Reserve Bank of Australia Governor Philip Lowe (2024)

• AUD/USD sellers take a breather around one-week low, pausing four-day downtrend.
• Reserve Bank of Australia’s latest Meeting Minutes, statements from officials favor AUD/USD bears but pre-event anxiety test downside moves.
• China-linked fears and altered expectations for Federal Reserve’s next move exert downside pressure on the risk-barometer pair.
• RBA Governor Philip Lowe’s dovish remarks could add strength to the bearish bias.

AUD/USD seesaws around 0.6600 as bears await more clues to extend the four-day downtrend during early Tuesday.

In doing so, the Aussie pair awaits the scheduled speech from the Reserve Bank of Australia’s (RBA) Governor Philip Lowe. the fresh COVID-19 fears and bearish bias at the Australian central bank keep the bears hopeful.

Reserve Bank of Australia Governor Philip Lowe could favor AUD/USD sellers

Ever since the Reserve Bank of Australia (RBA) disappointed markets with a smaller rate hike in October, the bearish bias for the AUD/USD mounted. Adding strength to the downside fears were the latest comments from the RBA policymakers and the Minute Statement of the Aussie central bank’s recent meeting.

In his latest comments, Reserve Bank of Australia (RBA) Deputy Governor Michele Bullock said, “We have already raisedratesaggressively.” On the same line were the latest statements from the RBA Minutes stating, “No pre-set path, considered 50bps hike, saw a stronger case for 25bps in November.”

It should be noted that the RBA surprised markets by announcing 25 basis points (bps) of a rate hike in October and maintained the same pace of interest rate increase during the latest monetary policy.

Given the latest updates from the Reserve Bank of Australia, Governor Philip Lowe is less likely to turn hawkish and hence the AUD/USD bears have a hope to keep the reins.

Coronavirus woes also tease the Aussie bears

Considering Australia’s trade ties with China, a fresh jump in the Covid numbers from the major customer weighs on the AUD/USD prices of late. “China's capital warned on Monday that it was facing its most severe test of the COVID-19 pandemic, shutting businesses and schools in hard-hit districts and tightening rules for entering the city as infections ticked higher in Beijing and nationally,” said Reuters. It should be noted that China reported the highest daily coronavirus numbers since April as per the latest readings of 26,824.

United States-China optimism probe AUD/USD sellers

After the previous week’s meeting between United States President Joe Biden and his Chinese counterpart Xi Jinping, officials from the Washington and Beijing appear to be braced for more cordial relations going forward. In this regard, the Wall Street Journal (WSJ) reported that China is turning to an old friend in corporate America to bolster communications with the United States, as PresidentXi Jinpingtries to stabilize the bilateral relationship while gearing up for greater competition between the two powers. It’s worth noting, however, that the Sino-American tussles over Taiwan and the latest controls on technology from Washington seem to challenge the optimism surrounding the friendship among the world’s top two economies.

Federal Reserve bets are also important

Other than RBA Governor Lowe and the COVID-19 updates, also the likely ties between the United States and China, concerns surrounding the United States Federal Reserve’s (Fed) next move appears as the key catalyst to watch for the AUD/USD pair traders.

Recently firmer prints of the US Retail Sales and Producer Price Index (PPI) for October underpinned the hawkish bets on the Fed’s next move. However, Atlanta Federal Reserve President Raphael Bostic and Cleveland Fed President Loretta Mester appeared less hawkish in their latest speeches. That said, downbeat prints of the Chicago Fed National Activity Index for October, to -0.05 compared to 0.17 prior, also challenged the US Dollar bulls.

AUD/USD technical analysis

The AUD/USD pair’s first daily closing below the 10-Day Moving Average (DMA) in 13 days joins the receding bullish bias of the Moving Average Convergence and Divergence (MACD) indicator, as well as a retreat of the Relative Strength Index (RSI) placed at 14, to keep the bears hopeful.

That said, an upward-sloping support line from November 03, close to 0.6570 by the press time, lures the AUD/USD bears ahead of multiple supports marked near the 38.2% Fibonacci retracement levels of the Aussie pair’s August-October downturn, around 0.6540.

It’s worth noting that late October’s swing high near 0.6520 appears the last defense of the AUD/USD pair buyers before directing the quote toward the 23.6% Fibonacci retracement level surrounding 0.6400.

Alternatively, the 10-DMA and the 100-DMA restrict short-term AUD/USD upside near 0.6655 and 0.6690 in that order. Adding strength to the 0.6655 hurdle is the 50% Fibonacci retracement level.

Even if the quote crosses the 0.6690 resistance, the 0.6700 round figure and 61.8% Fibonacci retracement near 0.6770, also known as the Golden Ratio, become necessary to convince the AUD/USD pair buyers.

Overall, AUD/USD is on the bear’s radar but the road to the south is a bumpy one.

AUD/USD: Daily chart

Trend: Limited downside expected