AUD/USD Faces Bearish Pressure Ahead of Federal Reserve Rate Decision

The AUD/USD currency pair experienced a decline in early trade on Tuesday due to dollar strength. Market participants bid up the Greenback amid rising tensions in the Middle East and expectations that the Federal Reserve will raise interest rates later this week.

The recent sell-off has led traders to question whether the AUD/USD has entered a new downtrend or is simply undergoing a pullback within a longer-term uptrend. The pair's downward reversal is being driven by better-than-expected economic data in recent weeks and soaring energy prices, which have narrowed the interest rate outlook between the Fed and Reserve Bank of Australia (RBA).

The formation of an ominous 'death cross' and expectations that the Federal Reserve will hike rates this week underpin the recent bearish price action. The AUD/USD appears to have entered a new downtrend, with bearish technicals and fundamentals aligning to place downward pressure on the pair.