Australian Dollar dips on renewed US Dollar strength

• AUD/USD falls as the USD regains strength.
• RBA holds rates steady but remains hawkish, citing inflation risks.
• The Fed's neutral outlook suggests caution regarding future rate cuts.

The AUD/USD pair declined by 1.25% to 0.6600 on Friday, continuing its downtrend. The renewed strength of the US Dollar weighs on the pair despite improved risk sentiment. However, the hawkish stance of the Reserve Bank of Australia (RBA) and expectations of additional Chinese stimulus could support the Aussie.

The AUD/USD pair experienced volatility amid the recent US presidential election and RBA's monetary policy stance. Trump's election victory initially triggered a decline in the Aussie, but the RBA's hawkish stance stabilized the currency. The RBA's emphasis on restrictive interest rates and positive signs from China have provided support.

Daily digest market movers: Australian Dollar declines amid renewed US Dollar strength after FOMC meeting

• The Fed acknowledged economic expansion but noted easing labor market conditions and elevated inflation, maintaining a neutral outlook.
• Powell stated that the central bank will continue reducing its balance sheet and follow a data-dependent policy-making approach.
• Earlier in the week, the AUD/USD pair rose after the RBA left interest rates unchanged but signaled a hawkish stance, emphasizing the need for restrictive policy to combat inflationary pressure.
• RBA Governor Michelle Bullock reiterated the necessity of maintaining steady interest rates until the economy moderates more than anticipated.
• As the RBA doesn't fully embrace cuts, the downside for the AUD/USD might be limited. However, the economic strength on the US is a thing to follow as it might continue pushing the pair down.

AUD/USD technical outlook: AUD/USD turns bearish after failing to capitalize on SMA convergence

The Relative Strength Index (RSI) is at 46, in negative territory, and declining sharply. The Moving Average Convergence Divergence (MACD) is flat and red, suggesting that selling pressure is flat. The overall outlook for the AUD/USD is bearish.

The AUD/USD pair's failure to surmount the convergence of the 200 and 20-day Simple Moving Averages (SMAs) at approximately 0.6630 signaled a resumption of its downtrend. This technical development led to a decline toward the 0.6600 support level, indicating further bearish momentum. The inability to break above the key resistance at 0.6630 suggests that the pair may continue its downward trajectory in the near term.