AUD/USD Holds Firm Near 2025 Highs as US-China Trade Hopes Lift Aussie Dollar

The Australian Dollar (AUD) remains resilient near the 0.6400 mark against the US Dollar (USD), supported by renewed risk appetite and optimism over a potential de-escalation in the US-China tariff conflict. As of early Friday, AUD/USD is consolidating gains just below its year-to-date high of 0.6439, touched earlier this week.

Technical Outlook: Bulls Maintain Momentum Above Key Moving Averages

The AUD/USD pair trades near 0.6360, maintaining a bullish posture as it holds above the 9-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) continues to trend above 50, signaling sustained buying pressure.

• Resistance levels to watch: Immediate resistance lies at 0.6439. A successful breakout could open doors for a test of the 0.6515 level, the highest since late 2024.
• Support zones to monitor: The 9-day EMA at 0.6346 serves as immediate support, followed by the 50-day EMA at 0.6296. A decisive drop below these could expose downside risk toward the March 2025 low of 0.5914.

Fundamental Drivers: AUD Supported by Strong Domestic Data & Trade Developments

Australian data this week offered a positive surprise. The Judo Bank Composite PMI for April remained in expansion territory at 51.4, marking the seventh consecutive month of growth. Both the services and manufacturing sectors contributed, though at a slightly slower pace.

Meanwhile, geopolitical developments continue to drive forex sentiment. US President Donald Trump reiterated progress in trade negotiations with China, stating that tariffs may be adjusted in the coming weeks. However, he also warned that China must first signal willingness to reach a deal.

• US-China Tariff Impact: Current tariffs—145% on Chinese goods and 125% on US exports—are widely viewed as unsustainable. Treasury Secretary Scott Bessent acknowledged the need to ease these barriers for meaningful dialogue.
• RBA Rate Cut Speculation: Markets are now pricing in a 70% chance that the Reserve Bank of Australia (RBA) may cut rates by 25 basis points in its May 20 meeting, especially amid persistent inflationary pressure and tight labor conditions.

US Dollar Faces Mixed Signals Amid Weaker PMI Data

The US Dollar Index (DXY) slipped to 99.60 after climbing for two days, pressured by mixed economic indicators. The S&P Global Composite PMI dropped to 51.2 in April, down from 53.5, reflecting softening demand in the services sector. Manufacturing activity edged up slightly to 50.7.

Fed Chair Jerome Powell’s stance on holding interest rates steady has further weighed on USD sentiment, especially as Trump softened his rhetoric about Powell’s leadership, easing concerns over Fed independence.

Outlook: Aussie Dollar Eyes 0.65 as Bulls Take the Lead

If bullish momentum continues, AUD/USD could soon challenge the 0.65 psychological barrier. However, any signs of renewed US Dollar strength or deteriorating trade talks could cap upside gains.

Stay tuned to www.dailyforex.pk for the latest updates on currency forecasts, economic trends, and forex news impacting the AUD/USD pair.