- China unexpectedly cut rates to boost economic growth.
- The economic situation in China remains bleak.
- This week, investors will focus on PMI, GDP and inflation data from the US.
AUD/USD price analysis shows huge bearish momentum as the Aussie suffers after an unexpected rate cut by the People’s Bank of China. Meanwhile, investors braced for more U.S. inflation data that will weigh on Fed rate cut expectations.
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China unexpectedly cut rates on Monday to boost economic growth after second-quarter data reflected poor economic performance. The last time this country made such a move was in August last year. The move sent the Aussie down sharply, mirroring the yuan.
The economic situation in China remains bleak. The property crisis continues, and the country is on the verge of disinflation. Therefore, the top officials met and decided that the best move was to reduce the cost of borrowing.
Meanwhile, Australians fell from their rally on Thursday last week when Australian employment showed a jump in jobs. Since then, the currency has been vulnerable to movements in the dollar and yuan. Notably, the dollar rallied late in the week amid safe haven inflows. An unexpected cyber outage on Friday hurt risk sentiment, pushing the Aussie lower. On the other hand, the dollar strengthened, ending a period of weakness caused by increasing expectations of a Fed rate cut.
This week, investors will focus on PMI, GDP and inflation data from the US. On Friday, the focus will be on the core PCE price index, which could show a 0.2% increase. This forecast is higher than the previous increase of 0.1%. A lower figure than expected would confirm the downward trend in inflation.
AUD/USD key events today
There will be no major impact reports from Australia or the US today. Accordingly, the price could extend the movement on Monday.
AUD/USD Price Technical Analysis: Solid bearish momentum is charging support at 0.6600
On the technical side, the AUD/USD price is in freefall and recently broke below the 0.6640 support level. The price fell sharply after breaking below and retesting its bullish trend line.
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The decline was sharp, breaking below support levels with several shallow breaks. Consequently, the bearish bias is strong. The next target for this decline is at the 0.6600 support level. Here, the price could pause for a pullback before the downtrend resumes.
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