Daily Price Outlook
During the European trading session, the AUD/USD currency pair is seeing a strong rise, moving towards a two-week high of 0.6365. The Australian Dollar (AUD) is strengthening as the US Dollar (USD) experiences a significant sell-off.
This decline in the dollar is driven by growing concerns among traders that the newly introduced tariffs by President Donald Trump could push the US economy into a recession in the near term.
US Dollar Faces Intense Sell-Off
On the US front, the broad-based US dollar has experienced a sharp decline, with the US Dollar Index (DXY), which tracks the Greenback against six major currencies, dropping more than 2% to near 102.00.
This marks the largest one-day correction in years, highlighting significant weakness in the USD. However, the key factor behind this sell-off is President Trump's announcement of new tariffs on imported goods to the US, set to take effect on April 5.
On Wednesday, President Trump introduced a reciprocal tariff plan, imposing a 10% baseline levy on all imports, with additional tariffs ranging from 10% to 49% depending on the country.
Market participants are worried that these broad tariffs could drive inflation and negatively impact US economic growth, potentially leading to stagflation.
Hence, this scenario would make it more challenging for the Federal Reserve to manage the economy and could slow down future recovery.
Impact on Australia and China
Therefore, the impact of these tariffs extends beyond US borders, particularly affecting Australia. With the US imposing a 34% increase in tariffs on Chinese products, in addition to a 20% levy already imposed on Chinese goods, Australia’s economy could face further pressures.
This is due to Australia's significant trade relationship with China, with China being one of its largest trading partners. However, the concerns over China’s economic outlook are growing, weighing on the Australian Dollar (AUD).
China has already urged the US to reconsider its tariff strategy, warning that countermeasures may be implemented to safeguard its economic interests. This ongoing trade tension between the US and China adds to the uncertainties, especially for countries like Australia that depend heavily on exports to China.
AUD/USD – Technical Analysis
The Australian dollar is trading near $0.6299, showing signs of bullish momentum after rebounding from the $0.62650 support zone.
This level, which aligns with the ascending trendline and previous demand area, has proven to be a key pivot in recent sessions.
The 50-period SMA at $0.62868 is now being tested as near-term support after a strong upward move that briefly reached resistance at $0.63130.
Price action remains compressed within a broader symmetrical triangle pattern, with lower highs forming against a gradually rising support base.
A break above $0.63130 would signal renewed bullish control, potentially targeting the next resistance levels at $0.63406 and $0.63634.
On the downside, a sustained move below $0.62650 would expose deeper supports at $0.62333 and $0.62255. If breached, this could trigger a broader breakdown toward the base of the pattern near $0.61973.
The RSI at 55.39 shows mild bullish momentum, holding above its moving average. However, traders should watch for a confirmed close above $0.63130 before anticipating any significant upside extension.
Entry above $0.62650 remains valid while price holds trendline support. Targets lie near $0.63130 with a protective stop at $0.62333.
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