The AUD/USD currency pair faced renewed selling pressure on Tuesday, dipping towards 0.6550 in Asian trading. The downward momentum is primarily driven by disappointing Australian Westpac Consumer Confidence figures, concerns about China’s economic struggles, falling commodity prices, and the continued strength of the US dollar. Following a solid performance last week, the US dollar remains strong on the back of the “Trump trade,” pushing the US Dollar Index (DXY) to new four-month highs around 105.70.

The Australian Dollar (AUD) remains under pressure, moving below the key 200-day SMA at 0.6629, signaling further downside risks. Adding to this sentiment, the decline in copper prices and a stable but lower iron ore price have also weighed on Aussie dollar performance. China’s recent data pointed to a slowdown, with consumer prices growing at the slowest rate in four months in October, while producer prices declined, raising concerns over China’s economic outlook and casting doubt on the effectiveness of its latest stimulus measures.

On the policy front, the Reserve Bank of Australia (RBA) kept rates steady at 4.35% on November 5. It maintained a neutral stance, suggesting that inflation gradually reached its 2-3% target range despite a slight cut in growth forecasts. RBA Governor Michele Bullock’s balanced comments reinforced the central bank’s cautious approach, with markets anticipating a rate cut as late as May 2025.

While potential Federal Reserve rate cuts may relieve AUD/USD, strong US dollar demand, likely fueled by the anticipated inflationary effects of Trump’s policies, could keep upward pressure on the pair. Persistent concerns surrounding China’s economic health suggest ongoing caution for the Aussie dollar.

Trade Idea:

Short AUD/USD at 0.6580, targeting 0.6500, with a stop loss at 0.6620. The pair’s downtrend is supported by weak Australian data and strong USD sentiment.