The Australian Dollar (AUD/USD) has staged a modest recovery, rebounding above 0.6200 after six consecutive days of losses. The rebound comes as China’s PMI data exceeded expectations, providing fresh support for the Aussie dollar amid ongoing global trade tensions.
However, the Federal Reserve’s cautious stance, recent U.S. tariff escalations on China, Canada, and Mexico, and mixed Australian economic data keep the AUD/USD outlook uncertain.
AUD/USD Technical Analysis: Key Levels to Watch
📊 Current Price: 0.6227
📉 Support Levels: 0.6200, 0.6087 (April 2020 low)
📈 Resistance Levels: 0.6297 (9-day EMA), 0.6302 (14-day EMA), 0.6408 (February high)
Key Technical Indicators
✅ Bearish Momentum: The pair remains below the 9-day and 14-day EMAs, signaling weak short-term price strength.
✅ RSI Below 50: The Relative Strength Index (RSI) is still under 50, indicating continued downside pressure.
✅ Critical Support at 0.6200: A break below 0.6200 could trigger further selling, potentially sending AUD/USD toward 0.6087 (April 2020 low).
✅ Upside Potential: A move above 0.6300 could strengthen bullish sentiment and lead to a test of 0.6408 (February high).
Fundamental Factors Driving AUD/USD
1. Strong Chinese PMI Lifts Aussie Sentiment
🔹 China’s official PMI data came in stronger than expected, reinforcing Australia’s close trade ties with the Chinese economy.
🔹 China remains Australia’s largest trading partner, and strong economic data often boosts the Australian Dollar.
🔹 Positive PMI figures helped stabilize AUD/USD, halting a six-day losing streak.
2. Trump’s Tariffs on China, Canada & Mexico Add Market Uncertainty
🔸 U.S. President Donald Trump has intensified trade tensions by imposing 25% tariffs on Canada and Mexico, effective March 4.
🔸 The existing 10% tariff on Chinese imports was also increased to 20% in response to ongoing economic disputes.
🔸 Trade tensions negatively impact risk assets, including the Australian Dollar, due to its close correlation with global trade trends.
3. Federal Reserve’s Hawkish Stance Keeps USD Strong
💰 U.S. Treasury Secretary Scott Bessent reaffirmed the Fed’s commitment to keeping rates steady, which has boosted the U.S. Dollar.
📊 The U.S. Dollar Index (DXY) climbed above 107.00, adding downward pressure on AUD/USD.
⚠️ A stronger USD typically weighs on AUD/USD, keeping gains limited.
4. Australia’s Economic Data Remains Mixed
📉 Private Capital Expenditure: Unexpectedly contracted by 0.2% in Q4 2024, missing expectations of 0.8% growth.
📊 Reserve Bank of Australia (RBA) Rate Cut: The RBA lowered its cash rate to 4.10%, marking its first rate cut in four years.
💼 RBA Governor Michele Bullock stressed that further rate cuts are not guaranteed, despite market speculation.
Global Market Sentiment & Impact on AUD/USD
🌍 Risk-off mood continues as investors remain cautious amid:
✔️ Trump’s tariff threats against China, Canada, and Mexico
✔️ The Federal Reserve’s cautious approach toward interest rate cuts
✔️ China’s economic response to trade tensions
🔹 What to Watch Next?
📆 U.S. Personal Consumption Expenditures (PCE) Price Index
📆 Any further trade policy announcements from the White House
📆 RBA’s policy outlook on inflation and employment trends
Conclusion: Where is AUD/USD Headed?
📉 Bearish Scenario: If risk sentiment worsens, AUD/USD could break below 0.6200, opening the door for a move toward 0.6087.
📈 Bullish Scenario: A break above 0.6300 would strengthen bullish momentum, setting the stage for a rally toward 0.6408.
The Australian Dollar remains vulnerable to U.S. policy shifts, Federal Reserve decisions, and China’s economic trajectory. Traders should closely monitor risk sentiment, U.S. inflation data, and RBA announcements for the next big move in AUD/USD.
