AUDUSD is turning towards the south as the dollar index starts to recover from dovish rate cut bets. Ahead of key employment data from Australia, consumer confidence fell sharply by 1.3% monthly to 81. Despite having lower rates relative to many economies like the US, heavy household debt is causing additional problems due to high rates.

(AUDUSD Daily Chart)

The trend for AUDUSD has been pointing downward since early 2021 and it has not changed yet. The recent breakout attempt fell short, leading to a sharp retreat, and now the price is below the short-term uptrend (orange trendline). This week’s employment data will be important for direction. Last month, the big positive surprise lifted the AUDUSD for days, but if this week’s data does not satisfy the traders, the 200-day moving average could be in danger.

(AUDUSD Daily Chart)

The 0.6585-0.6570 zone is the main support for now. A weak employment data could lead to a break of this support, further weakening the currency towards the Fibonacci 61.8% level at 0.65. The 200-day moving average will be key for the medium-term direction. If it holds, the AUD bulls might attempt to capture the key short-term resistance at 0.6685. However, overall downward pressure might persist as long as the Fed does not start early rate cuts in March.