The AUDUSD fell sharply today, dropping 0.81% from the previous close. After a brief rise to 0.6567, the price began to decline, breaking through important support levels at 0.65407 and going below the 100-hour and 200-hour moving averages. The decline was driven by Producer Price Index (PPI) data, pushing the price down to a low of 0.6483, close to Tuesday’s low of 0.6481. This drop completes a cycle from Tuesday’s low to today’s high and back to the low. Sellers now have a stronger hand, and further declines could happen if the low is breached.

Reversal Criteria

For a reversal to occur, the pair needs to rise above the 38.2% retracement level at 0.64966 and the 200-hour moving average at 0.6508. Without these moves, sellers will keep their advantage. With the AUDUSD returning to the 0.6483 level, sellers clearly have control. Today’s US Producer Price Index data for July 2025 surprised on the upside at +0.5% month-over-month, suggesting that the Federal Reserve may stay restrictive. The strong rejection from the 0.6567 high indicates weak conviction for upward movement. This US inflation data contrasts with the Reserve Bank of Australia’s recent dovish stance from its early August 2025 meeting. Australian Q2 2025 GDP was also low at 0.2%, highlighting the policy differences that favor a stronger USD. This is a key reason for today’s bearish technical break. The latest economic data from China adds to the pressure on the Aussie dollar. July 2025 industrial production fell short of expectations, indicating a slowdown for Australia’s biggest trading partner. This impacts the commodity-linked currency and suggests further weakness may follow.

Strategies And Predictions

In the coming weeks, we recommend buying put options to gain downside exposure. This allows for potential profits if the price drops below the 0.6481 support level while limiting risk to the premium paid. Consider September 2025 puts with a strike price around 0.6400 to take advantage of this trend. Alternatively, for those looking to generate income, selling out-of-the-money call spreads could work well. A bear call spread with the short strike just above the key resistance level around 0.6510 would be profitable if the pair stays below that point. This strategy benefits from a falling price and time decay. This situation is similar to the second half of 2023, when a hawkish Fed and concerns over China’s economy caused the pair to drop significantly. We observed similar technical breakdowns on the hourly chart back then, leading to a multi-week decline. Current price actions suggest that history may be repeating, indicating a possible test of lower levels. Create your live VT Markets account and start trading now.

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