AUD/USD Strengthens Toward 0.6400 Amid Weaker US Dollar and Chinese Support

Aussie Gains Momentum, But Risk Sentiment May Cap Upside

The AUD/USD pair continues its upward momentum, pushing toward 0.6400 during the Asian session on Monday. The Australian dollar is benefiting from a weaker US Dollar (USD) and Chinese government initiatives to support rural revitalization. However, cautious market sentiment and upcoming US economic data could limit further gains.

The US Dollar Index (DXY) has recovered from its year-to-date low of 106.30, rising to 106.75, as investors focus on the upcoming US PMI data, which could influence Federal Reserve (Fed) policy expectations. Meanwhile, the Reserve Bank of Australia (RBA) maintains a cautious stance on monetary expansion, warning that aggressive rate cuts could stall disinflation progress.

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AUD/USD Technical Analysis – Key Levels to Watch

📊 Technical Indicators Show Strong Resistance at 0.6400
✅ AUD/USD is testing the 0.6400 resistance level, which could cap gains in the near term.
✅ The pair remains above the 50-period EMA, signaling bullish momentum.
✅ The Relative Strength Index (RSI) hovers near 50, suggesting a neutral bias.

📈 Resistance Levels to Watch:

• 0.6400 – Psychological barrier & immediate resistance.
• 0.6450 – Next key resistance zone.
• 0.6485 – February high, major breakout level.

📉 Support Levels to Watch:

• 0.6350 – First downside target.
• 0.6320 – Key Fibonacci retracement level.
• 0.6280 – Strong support if bearish pressure increases.

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Fundamental Overview – Key Market Drivers for AUD/USD

📌 US Dollar Faces Pressure Ahead of PMI Data

• The US Flash PMI report is expected to show stronger business activity, which could boost USD if data beats expectations.
• Manufacturing PMI is forecasted at 51.5, while Services PMI is expected at 53.0, signaling economic resilience.
• A strong PMI print may reinforce the Fed’s restrictive stance, keeping rate cuts off the table for now.

📌 China’s Supportive Policies Boost AUD

• The Chinese government’s rural revitalization efforts are seen as a positive driver for commodity-linked currencies like AUD.
• Any additional stimulus measures from Beijing could further support the Australian dollar.

📌 RBA’s Cautious Monetary Stance

• RBA Governor Michele Bullock warned against premature rate cuts, emphasizing that a rapid easing cycle could disrupt disinflation progress.
• Australian PMI data showed moderate improvement, with Composite PMI rising to 51.2, Services PMI at 51.4, and Manufacturing PMI at 50.6.

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Conclusion – What’s Next for AUD/USD?

The AUD/USD pair remains on an upward trajectory, supported by a weaker US dollar and Chinese economic policies. However, resistance at 0.6400 could cap further gains, with US PMI data and risk sentiment acting as potential catalysts.

💡 Market Outlook:
✅ A break above 0.6400 could push AUD/USD toward 0.6450 and 0.6485.
✅ If the pair fails to hold above 0.6350, a downside move toward 0.6320 is likely.
✅ Traders should monitor US PMI data and broader risk sentiment for near-term direction.

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