AUD/USD Capped Below 0.6630 Amid Mixed Signals; What Could Push It to 100 AUD/USD Conversion Levels

Four-Day Decline Reflects Conflicting Market Forces

The Australian Dollar has entered its fourth consecutive trading session under pressure, hovering near 0.6630 against the US Dollar. This persistent weakness stems from a combination of headwinds weighing on risk sentiment, yet downside momentum appears constrained by divergent policy expectations between two major central banks.

Bears Testing Patience: The Bearish Case

Recent economic data has stacked the deck against AUD bulls. Australia’s employment figures from last Thursday came in mixed, failing to inspire confidence in economic resilience. Simultaneously, disappointing macro releases from China on Monday reignited concerns about the world’s second-largest economy, a key trading partner for Australia. These fundamentals, coupled with a broader retreat in global equity markets, have pressured the riskier Australian Dollar lower.

Support From Rate Dynamics: The Other Side of the Story

Yet the selling pressure faces meaningful resistance from an intriguing policy divergence. RBA Governor Michele Bullock recently signaled that additional rate cuts may be unnecessary, and even hinted at the possibility of future rate increases if required. This hawkish rhetoric stands in sharp contrast to Fed expectations for continued interest rate cuts, supporting the AUD/USD pair.

Meanwhile, the US Dollar Index sits near its lowest level since early October as investors increasingly price in Fed rate reductions. The prospect of a dovish successor replacing Fed Chair Jerome Powell further weakens the Greenback, providing tailwind for the Australian currency and its cross against the dollar.

Technical Picture and Trading Outlook

With traders cautiously awaiting October’s delayed Nonfarm Payrolls report this week, conviction remains muted. Before confirming any breakdown in the three-week uptrend, market participants should await concrete follow-through selling pressure below key support levels. The interplay between risk-off sentiment and diverging monetary policy will likely dictate near-term direction for the AUD/USD pair around current levels.