Aussie dollar has room to fall if the current support level fails.

The AUD/USD pair has had a tough month, falling relatively consistently since mid-July. This decline can be attributed to several factors, most notably the strengthening of the USD driven by the Federal Reserve’s firm commitment to ‘higher for longer’ rates, aimed at taming inflation to meet target levels.

Another contributing factor to the AUD’s descent is the sluggish pace of China’s economic recovery. As China grapples with a gradual rebound, the demand for Australian exports, a crucial driver for the AUD, has been hampered.

Despite the challenges, The Reserve Bank of Australia (RBA) maintains room for action in its ongoing battle against inflation. This leaves the door ajar for the possibility of further rate hikes, which could potentially be positive for the AUD.

From a technical standpoint, the AUD/USD pair finds itself positioned at a critical support level. Having proven its resilience in late May as a support zone, traders will be watching to see if it will hold again. If this level fails, there is plenty of room to the downside for the pair, with the next major support level at around $0.62.

Key news events upcoming this week that could be a catalyst for the pair will be US Retail Sales on Tuesday and Aussie unemployment figures Thursday.