Australian Dollar slides to monthly low as Fed hike odds firm

The US Dollar is bid across the board ahead of the Fed’s Wednesday decision.
AUD/USD has broken to a new monthly low, handing back the last of its late July rally.
China will start the Asian session with its August activity data.

AUD/USD slipped to a new monthly low in the 0.7100s on Monday, driven by a firm run of United States (US) data that has pushed the market toward pricing in a Federal Reserve (Fed) rate hike at its meeting later this week.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

After a firm Producer Price Index (PPI) and Consumer Price Index (CPI) last Friday, the market has moved to price a rate hike at 90%, up from around 60% a week ago.

Higher Oil prices, which often help commodity currencies, are not offsetting the move. The pull on the Aussie is coming from the other side. Risk appetite has soured with US stock index futures pointing sharply lower on renewed worries about AI-related names, and soft Chinese lending data did nothing to help sentiment toward China-linked currencies.

China opens the Asian session with its August activity batch. The consensus looks for Industrial Production to pick up to 4.8% YoY from 4.5%, and for Retail Sales to rise to 0.8% from 0.6%.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.7119, extending its slide beneath both the 20-period and 100-period Simple Moving Averages (SMAs), which cap the pair at 0.7177 and 0.7179, respectively, and reinforce a bearish near-term bias. The recent drop has pushed the 14-period Relative Strength Index (RSI) into oversold territory near 22, hinting that while downside pressure remains dominant, selling momentum could be stretched in the short term.

On the topside, initial resistance emerges at 0.7125, followed by the nearby horizontal barriers at 0.7131 and 0.7137, before the clustered SMA zone around 0.7177–0.7179. On the downside, immediate support is defined by the horizontal level at 0.7108, and a clear break below this floor would open the path for an extension of the current bearish sequence.

(The technical analysis of this story was written with the help of an AI tool. Know more.)