Australian Dollar Continues to Slide as China's Economic Woes Weigh

While high inflation pressures could prevent further AUD decline, the currency's outlook remains bearish.

Market Movers:

Risk-off sentiment: Concerns about a slowing Chinese economy continue to dampen market sentiment, negatively impacting the risk-sensitive Australian Dollar.
Australian inflation data: While Q2 headline CPI rose to 3.8% YoY, June's headline CPI is expected to have moderated. Despite this, the RBA is likely to hold off on rate cuts due to inflation remaining above the target range.

Fed rate cut expectations: Markets anticipate a September rate cut by the Federal Reserve, but the probability of an RBA rate hike in Q4 has decreased due to concerns about China's economy. However, the RBA is still expected to delay cuts until Q2 2024, potentially limiting the downside for the Aussie.

Upcoming NFP report: Traders are closely watching the release of the Nonfarm Payrolls (NFP) report, which could significantly impact the AUD/USD pair.

Technical Analysis:

The AUD/USD pair's position below the 20, 100, and 200-day SMAs confirms a bearish outlook. The RSI remaining below 40 suggests potential overselling, while the MACD indicates a slight bearish momentum. Despite the overall weakness, the Aussie could find support near the 0.6500 psychological level, with resistance at 0.6580.