Daily Price Outlook
During the European trading session, the AUD/USD currency pair failed to stop its bearish trend and remained under pressure around the 0.6285 level.
However, the declines were weighed down by disappointing economic data and a stronger US Dollar (USD). This marks the fifth consecutive day of losses for the Australian currency, following a series of disappointing economic data releases from Australia.
Weaker Australian Economic Data and Inflation Figures Weigh on AUD
On the data front, the Australian Private Capital Expenditure (CapEx) data for Q4 2024 revealed a contraction of 0.2% quarter-on-quarter, significantly below market expectations of a 0.8% increase. This unexpected decline follows a revised 1.6% growth in the previous quarter.
However, the weaker-than-anticipated business investment figures have raised concerns about the strength of the Australian economy, contributing to the bearish sentiment surrounding the AUD.
The decline in CapEx has added to worries about future economic growth, weighing on investor confidence and further pressuring the Australian dollar.
Moreover, Australia's monthly Consumer Price Index (CPI) for January showed a 2.5% year-over-year increase, falling short of market expectations of a 2.6% rise, signaling weaker inflation momentum.
Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser also expressed cautious optimism, stating that inflation may improve but emphasizing the need for concrete results, especially given the tightness in the Australian labor market, which continues to pose challenges to controlling inflation.
Therefore, the weaker-than-expected economic data and inflation figures have increased bearish sentiment around the AUD, contributing to downward pressure on the AUD/USD pair, potentially leading to further declines.
US Dollar Strengthens Amid Strong Economic Data and Geopolitical Risks
On the other side, the US Dollar remained bullish, buoyed by stronger-than-expected US economic data and geopolitical factors.
The US Dollar Index (DXY) strengthened, reaching near 106.50, as traders assessed the strength of the US economy and the prospects of continued Federal Reserve policy tightening.
Federal Reserve officials, including Raphael Bostic, have reiterated that interest rates should remain at current levels to continue exerting downward pressure on inflation.
Furthermore, US President Donald Trump’s statements regarding tariffs on imports from Canada and Mexico, coupled with tightening controls on chip exports to China, added fuel to concerns over a potential trade war.
These geopolitical risks boosted the demand for the US Dollar as a safe haven, further weighing on the AUD/USD currency pair.
PBOC Actions and US-China Trade Tensions Add to Pressure
Apart from this, the Australian Dollar also faced pressure from developments in China, Australia’s largest trading partner. The People’s Bank of China (PBOC) took steps to support its banking sector by issuing special treasury bonds to strengthen the capital of state-owned banks.
Despite this action help stabilize China’s economy and potentially boost demand for Australian exports, the ongoing trade tensions between the US and China continue to heighten market uncertainty, which could still weigh on the AUD.
AUD/USD – Technical Analysis
AUD/USD is trading at $0.62940, down 0.01%, showing some hesitation below the Pivot Point at $0.62854. The pair is struggling to gain momentum as it remains under the 50-day Exponential Moving Average (EMA) at $0.63443, suggesting a bearish bias in the short term.
Immediate resistance is seen at $0.63271, with stronger hurdles at $0.63560 and $0.63921. A break above $0.62854 could trigger buying interest, pushing the pair towards these resistance levels.
On the downside, support is located at $0.62544, followed by more substantial floors at $0.62163 and $0.61848. A break below $0.62544 would reinforce the bearish outlook, likely leading to a test of the next support at $0.62163.
Should prices continue to fall, the key support at $0.61848 could act as a crucial area for potential buyers to step in.
The technical setup favors a bearish trend as long as AUD/USD trades below the 50 EMA at $0.63443. The 4-hour chart shows a pattern of lower highs and lower lows, highlighting the downward momentum.
The Pivot Point at $0.62854 is a critical level to watch; a break above this could invalidate the bearish bias, leading to a potential recovery towards $0.63271. Conversely, a drop below $0.62544 would confirm the bearish trend, targeting $0.62163.
Related News
- GOLD Price Analysis – Feb 27, 2025
JOIN LHFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.