AUD/USD Finds Support from Policy Divergence While Downside Pressures Persist Near 0.6630

AUD/USD weakens for a fourth consecutive session, pinned near 0.6630 amid competing drivers. The currency pair continues to face headwinds from a combination of structural challenges and market sentiment shifts. Disappointing Chinese economic releases and softer global risk appetite have pressured the perceived high-yield Australian Dollar, while mixed employment figures from Australia last week failed to provide support.

Yet the selling momentum has stalled at key technical levels, largely due to shifting monetary policy expectations. The Reserve Bank of Australia’s recent signals—Governor Michele Bullock notably stated that additional rate cuts may not be necessary and hinted at potential tightening if conditions warrant—create a hawkish backdrop for AUD. This contrasts sharply with growing market expectations for continued Federal Reserve rate reductions and speculation surrounding a more dovish successor to Fed Chair Jerome Powell.

The divergence in policy paths offers a floor to AUD losses. The US Dollar Index (DXY) has retreated to its weakest level since early October, reflecting diminishing conviction among dollar bulls. Traders are increasingly pricing in further Fed accommodation, which naturally disadvantages the USD against currencies like the AUD. For context, 1000 AUD in USD currently converts to approximately 663 USD at prevailing rates, illustrating the pair’s recent weakness.

Macro data timing creates hesitation. The delayed October US Nonfarm Payrolls report looms as this week’s critical event risk. Until that figure lands, many participants remain cautious about establishing fresh directional positions. The reluctance to commit aggressively ahead of such pivotal economic data suggests that meaningful breakouts—either higher or lower—may be limited in the near term.

Technical traders should monitor whether AUD/USD can reclaim and hold above 0.6650, which would signal renewed upside momentum. Conversely, a decisive break below 0.6600 could invite fresh sellers. For now, the pair appears anchored by crosscurrents between cyclical weakness and supportive policy divergence, making a wait-and-see approach prudent until the employment snapshot arrives.