Australian Dollar declines on USD recovery, outlook bright

• AUD/USD declines amidst rising risk-off sentiment.
• China's PBOC keeps its 1-year MLF rate steady at 2.30%, which failed to trigger movements on the AUD.
• The RBA's hawkish stance supports the Australian Dollar.

The AUD/USD declined by 0.30% to 0.6775 in Monday's session as the Australian Dollar (AUD) edged lower despite hovering around a seven-month high near 0.6800. The decline was primarily attributed to a broad USD recovery and a cautious market sentiment.

Amidst a volatile economic backdrop in Australia, the Reserve Bank of Australia's (RBA) aggressive stance against rising inflation has dampened market expectations regarding multiple cuts, which has benefitted the Aussie.

Daily digest market movers: Australian Dollar declines due to USD strength, lower commodities weigh

• AUD/USD multi-day rally faces resistance around 0.6760 due to weak copper prices, despite a recovery in iron ore prices.
• AUD's recent strength was driven by a weaker US Dollar and improved risk appetite.
• In addition, monetary policy divergence between the RBA and the Federal Reserve (Fed) catalyzed the pair.
• On the Chinese front, China's PBOC kept its 1-year MLF rate unchanged at 2.30%, but further stimulus is anticipated as the economy struggles.
• July industrial profits in China may provide insights into the persisting weaknesses in the mainland economy.
• Any signs of weakness in the Chinese economy might weigh on the Aussie

AUD/USD technical outlook: Bullish momentum eases, support at 0.6750

The AUD/USD pair faced further downside pressure on Monday, as buyers are taking a breather. The Relative Strength Index (RSI) is at 62 with a downward tendency, while the Moving Average Convergence Divergence (MACD) presents decreasing green bars, suggesting a decrease in bullish momentum. Volume has been relatively stable, indicating a lack of significant buying or selling pressure.

Overall, the technical outlook for AUD/USD remains neutral. The RSI is still above its midpoint, and the MACD shows decreasing bullish momentum. Further consolidation or a reversal could be in play.

Immediate support levels can be seen at 0.6750, 0.6700 and 0.6650, while resistance levels may be encountered at 0.6800, 0.6850 and 0.6900.