AUD/USD continued last week's decline on Monday, dropping to a low of 0.6579 and currently trading around 0.6588. However, foreign exchange analyst Akhtar Faruqui wrote that the hawkish rhetoric of the Reserve Bank of Australia may limit further declines in AUD/USD.

Traders remain cautious as they await the release of September inflation data on Wednesday, which may affect the monetary policy outlook of the Reserve Bank of Australia. The next interest rate decision of the Reserve Bank of Australia will be held on November 5th.

The Reserve Bank of Australia pointed out that the current 4.35% cash rate is sufficient to control inflation within the target range of 2% -3%, while also supporting employment. Therefore, it is unlikely that the Reserve Bank of Australia will consider a rate cut as early as November.

The US dollar is strengthening as recent positive economic data from the US has raised expectations that the Federal Reserve will take a more cautious stance in November. According to the CME FedWatch tool, the likelihood of the Federal Reserve cutting interest rates by 25 basis points in November is 92.8%, and it is not expected to cut interest rates by more than 50 basis points.

Forex analyst Akhtar Faruqui stated that daily chart technical analysis shows a bearish short-term outlook for the Australian dollar against the US dollar. The currency pair is showing a downward trend in the downtrend channel mode, with a 14 day relative strength index (RSI) close to 30, strengthening bearish sentiment.

In terms of support, the Australian dollar against the US dollar may test the area near the lower limit of the downward channel, which is around the 0.6560 level.

In terms of resistance, the most direct resistance level for AUD/USD is the psychological level of 0.6600, followed by the upper boundary of the downward channel at 0.6630. If AUD/USD breaks through 0.6630, it may test the 9-day moving average (currently at 0.6652).

AUD/USD daily chart