Insights 
VT 
The AUDUSD experienced a notable decline today, falling by 0.81% from its previous close. After an initial upward movement reaching 0.6567, the price began to drop, breaking through key support levels at 0.65407 and eventually surpassing the 100-hour and 200-hour moving averages.
The decline was exacerbated by PPI data, pushing the price to a daily low of 0.6483, close to Tuesday’s low of 0.6481. This movement essentially completed a cycle from the low on Tuesday to today’s high and back to the low. Sellers now hold a stronger position, and further declines are possible if the low is breached.
Reversal Criteria
For a reversal, the pair would need to rise above the 38.2% retracement level at 0.64966 and the 200-hour moving average at 0.6508. Without these moves, sellers maintain their advantage.
With the AUDUSD completing “the lap” back down to the 0.6483 level, sellers are clearly in control. This morning’s US Producer Price Index data for July 2025 came in hotter than expected at +0.5% month-over-month, fueling the view that the Federal Reserve will have to remain restrictive. The sharp rejection from the 0.6567 high shows that conviction to the upside is very weak.
This US inflation data contrasts sharply with the Reserve Bank of Australia’s recent dovish tone from its early August 2025 meeting. Australian Q2 2025 GDP also recently printed at a soft 0.2%, reinforcing the policy divergence that favors a stronger USD. We see this as a fundamental reason for the bearish technical break today.
Adding to the pressure on the Aussie dollar are the latest economic figures out of China. July 2025 industrial production missed expectations, signaling a continued slowdown for Australia’s largest trading partner. This weighs heavily on the commodity-linked currency and gives us another reason to expect further weakness.
Strategies And Predictions
For the coming weeks, we believe buying put options is a prudent strategy to gain downside exposure. This allows for participation in a potential move below the 0.6481 support level while strictly defining risk to the premium paid. We would look at September 2025 puts with a strike price around 0.6400 to capitalize on this momentum.
Alternatively, for those looking to generate income, selling out-of-the-money call spreads could be effective. A bear call spread with the short strike placed above the key resistance cluster around 0.6510 would profit if the pair remains below that level. This strategy benefits from both a falling price and time decay.
This environment is reminiscent of the second half of 2023, when a hawkish Fed and concerns over China’s economy drove the pair down significantly. We saw similar technical breakdowns on the hourly chart back then which preceded a multi-week decline. The current price action suggests history may be repeating itself, setting the stage for a test of lower levels.
