AUD/USD faces downward pressure and continues to fall, approaching the 0.6500 mark
2025-09-04 20:25:49
The Australian dollar (AUD) gave up its earlier gains during the European trading session on Thursday (September 4). Cautious market sentiment, fueled by the upcoming release of key US services sector activity and employment data, put downward pressure on the Australian dollar, which had depreciated by approximately 0.4% at press time.
On Wednesday, the Australian dollar/US dollar encountered resistance above the 0.6560 mark and subsequently fell back, with the exchange rate approaching the 0.6500 mark during the session. Although Australia's trade balance data showed positive performance - the trade surplus in July exceeded expectations, this did not provide significant support for the Australian dollar.
Dollar strengthens ahead of U.S. economic data
Investors are reluctant to sell the dollar for now and are awaiting the release of the U.S. ADP employment change data for further insight into the U.S. labor market. The market generally expects a small increase in employment, which may exacerbate market concerns about the labor market after the job openings report released on Wednesday showed signs of weakness.
Later today, the Institute for Supply Management (ISM) will release its August Services Purchasing Managers' Index (PMI) report. Markets expect the data to show a significant improvement in U.S. services sector activity in August, which could ease market concerns about downside risks to the U.S. economy.
However, the core market focus remains on the U.S. non-farm payroll report to be released on Friday. Investors will closely analyze the report to verify whether the widespread expectation that "current conditions are met for the Federal Reserve to cut interest rates in September" is true.
The Reserve Bank of Australia will keep interest rates unchanged until the end of the month
Australia's economic growth in the second quarter was 0.6% (beating expectations of 0.5%), announced yesterday, and thanks to strong household consumption, the annual economic growth rate reached its highest level in nearly two years.
This economic data further reinforces market expectations that the Reserve Bank of Australia will maintain its current interest rate level until the end of the month. This view was also supported by data released today: Australia's trade surplus widened to A$7.31 billion in July, from A$5.37 billion in June. This increase was driven by a 3.3% increase in exports and a 1.3% decrease in imports.
Previously, Reserve Bank of Australia Governor Michele Bullock had pointed out that further interest rate cuts were unlikely in an environment of accelerating consumer spending. This statement may have a certain restraining effect on the strength of the US dollar in today's AUD/USD outlook.
Technical Analysis
(AUD/USD 1-hour chart source: Yihuitong)
The AUD/USD pair retreated after hitting a strong resistance level of 0.6550 and stabilized below the lower band of the bullish channel, which suggests that selling pressure in the market has increased.
Today's AUD/USD outlook indicates bearish momentum. The price could test the near-term support level of 0.6485. If this level breaks, the exchange rate could fall further to 0.6425. The Stochastic Oscillator is sending a bullish signal for the bears: its indicator line has turned down from the overbought zone, confirming the possibility of further declines.
A breakout of the lower bullish channel would further confirm the bearish trend and the price could stabilize below 0.6495.
Summarize
Despite strong economic data released by Australia, the AUD/USD exchange rate is still facing downward pressure, which highlights the short-term advantage of the US dollar. From the technical analysis of the AUD/USD, the bearish momentum of the exchange rate is increasing, and there is a significant downside risk, which may fall to 0.6425.
At 20:24 Beijing time, AUD/USD was at 0.6516, down 0.40%.
On Wednesday, the Australian dollar/US dollar encountered resistance above the 0.6560 mark and subsequently fell back, with the exchange rate approaching the 0.6500 mark during the session. Although Australia's trade balance data showed positive performance - the trade surplus in July exceeded expectations, this did not provide significant support for the Australian dollar.
Dollar strengthens ahead of U.S. economic data
Investors are reluctant to sell the dollar for now and are awaiting the release of the U.S. ADP employment change data for further insight into the U.S. labor market. The market generally expects a small increase in employment, which may exacerbate market concerns about the labor market after the job openings report released on Wednesday showed signs of weakness.
Later today, the Institute for Supply Management (ISM) will release its August Services Purchasing Managers' Index (PMI) report. Markets expect the data to show a significant improvement in U.S. services sector activity in August, which could ease market concerns about downside risks to the U.S. economy.
However, the core market focus remains on the U.S. non-farm payroll report to be released on Friday. Investors will closely analyze the report to verify whether the widespread expectation that "current conditions are met for the Federal Reserve to cut interest rates in September" is true.
The Reserve Bank of Australia will keep interest rates unchanged until the end of the month
Australia's economic growth in the second quarter was 0.6% (beating expectations of 0.5%), announced yesterday, and thanks to strong household consumption, the annual economic growth rate reached its highest level in nearly two years.
This economic data further reinforces market expectations that the Reserve Bank of Australia will maintain its current interest rate level until the end of the month. This view was also supported by data released today: Australia's trade surplus widened to A$7.31 billion in July, from A$5.37 billion in June. This increase was driven by a 3.3% increase in exports and a 1.3% decrease in imports.
Previously, Reserve Bank of Australia Governor Michele Bullock had pointed out that further interest rate cuts were unlikely in an environment of accelerating consumer spending. This statement may have a certain restraining effect on the strength of the US dollar in today's AUD/USD outlook.
Technical Analysis
(AUD/USD 1-hour chart source: Yihuitong)
The AUD/USD pair retreated after hitting a strong resistance level of 0.6550 and stabilized below the lower band of the bullish channel, which suggests that selling pressure in the market has increased.
Today's AUD/USD outlook indicates bearish momentum. The price could test the near-term support level of 0.6485. If this level breaks, the exchange rate could fall further to 0.6425. The Stochastic Oscillator is sending a bullish signal for the bears: its indicator line has turned down from the overbought zone, confirming the possibility of further declines.
A breakout of the lower bullish channel would further confirm the bearish trend and the price could stabilize below 0.6495.
Summarize
Despite strong economic data released by Australia, the AUD/USD exchange rate is still facing downward pressure, which highlights the short-term advantage of the US dollar. From the technical analysis of the AUD/USD, the bearish momentum of the exchange rate is increasing, and there is a significant downside risk, which may fall to 0.6425.
At 20:24 Beijing time, AUD/USD was at 0.6516, down 0.40%.
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