Australia’s consumer slump leaves AUD/USD vulnerable

According to the Westpac–Melbourne Institute survey, Australian consumer sentiment fell 2.7% to 78.2 in November from 80.4 in October, reaching its lowest level since late 2022 and standing 24.6% below its reading a year earlier. The decline was led by the sub-index measuring expectations for the economy over the next 12 months, which dropped 10.2% to 70.3, its weakest since August 2020. Westpac attributed the deterioration to concerns about inflation and further interest rate increases. Weak confidence ahead of the Christmas shopping season points to continued pressure on household spending.

The US Dollar Index (USDX), another important driver of the pair, trades near 101.50 in the morning session. October US inflation data are due at 13:30 GMT (15:30 GMT+2) and could influence the Federal Reserve’s December interest rate decision. Headline CPI is forecast to slow from 0.6% to 0.3% month on month while accelerating from 3.7% to 3.9% year on year. Core CPI, which excludes food and energy, is expected to ease from 0.3% to 0.2% monthly and rise from 2.6% to 2.8% annually. Higher annual inflation could reinforce expectations of further tightening, although the market reaction will depend on how the results compare with forecasts. Ahead of the release, CME FedWatch indicated an 84.2% probability of a December rate hike, up from 77.4% a week earlier.

Support and resistance levels

On the daily chart, the pair remains above the support line of a local descending channel with dynamic boundaries at 0.6980–0.6770. The broader bearish pressure was also discussed in our previous AUD/USD analysis.

Technical indicators have maintained a sell signal since the beginning of the month: the Alligator indicator’s fast moving averages point lower and remain separated from the slower lines, while the Awesome Oscillator histogram forms new corrective bars in negative territory.

Support levels: 0.6890, 0.6790.

Resistance levels: 0.6950, 0.7050.

Trading scenarios and AUD/USD forecast

Short positions may be opened after the price declines and holds below 0.6890, targeting 0.6790, with a stop-loss at 0.6960. Implementation period: 7 days or more.

Long positions may be opened after the price rises and holds above 0.6950, targeting 0.7050, with a stop-loss at 0.6880.