Australian Dollar declines as it approaches critical level

• AUD/USD declines amidst renewed selling pressure, testing 0.6700 support.
• Market sentiment implies a 55% probability of a 25-basis-point rate cut by the RBA this year.
• The fragile economic situation in China also weighs on the Aussie.

The AUD/USD pair declined by 0.40% to 0.6705 in Tuesday's session as the Australian Dollar faced renewed selling pressure. The US Dollar has regained strength, moving toward two-month highs due to increased risk aversion and ongoing concerns about China.

The main mover of the Aussie lately is the economic situation in China, which seems to be unnerving investors and hence pushing them to seek refuge in the US Dollar. In the meantime, markets seem to be confident of the Reserve Bank of Australia (RBA) cutting 25 bps by year's end.

Daily digest market movers: Australian Dollar sinks on strong USD and Chinese economic woes

• The bearish momentum for the Australian Dollar was caused by an irresolute US Dollar and skepticism about China's stimulus measures.
• A decline in copper prices also contributed to the downward pressure on the Australian Dollar, while iron ore prices remained mostly unchanged.
• Deflationary concerns deepened in China based on September data, raising doubts about the effectiveness of its stimulus efforts.
• Market sentiment reflects a 55% probability of a 25 bps rate cut by the RBA by year-end.

AUD/USD technical outlook: Bearish momentum intensifies, buyers must defend 0.6700

The AUD/USD currency pair has declined in recent sessions with a drop of 0.42% on Tuesday. This decline is in line with several technical indicators. The Relative Strength Index (RSI), which measures the strength of buying and selling pressure, is currently at 36, indicating that the selling pressure is stronger. The RSI is also declining sharply, suggesting that the selling pressure is intensifying.The Moving Average Convergence Divergence (MACD) is another indicator that suggests that bearish pressure is rising. Overall, the technical outlook for the AUD/USD is bearish, suggesting that the pair could continue to fall in the near term. Key support levels to watch include 0.6700, 0.6680 and 0.6650, while resistance levels to watch include 0.6750, 0.6760 and 0.6780.