Daily Price Outlook
Despite the weaker US dollar, the AUD/USD currency pair continues its mild bearish trend, staying under pressure around the 0.6210 level. The downward movement can be attributed to the release of the Reserve Bank of Australia (RBA) Meeting Minutes and retail sales data.
However, the RBA's February minutes highlighted economic risks, strong job growth, and persistent inflation, which raised expectations for potential rate cuts.
This sentiment weighed on the AUD/USD pair. Apart from this, a risk-off market sentiment, fueled by escalating trade tensions, further contributed to the pressure on the pair.
AUD/USD Under Pressure Amid RBA Rate Cut Concerns and Mixed Economic Data
On the AUD front, the release of the Reserve Bank of Australia (RBA) Meeting Minutes and Retail Sales data kept the AUD/USD pair under pressure. However, the RBA’s February minutes highlighted economic risks and concerns about inflation, despite a strong job market.
The central bank noted that current labor market conditions did not align with its 2.5% inflation target, increasing the likelihood of future rate cuts. Meanwhile, the weaker consumer confidence and ongoing economic uncertainty continued to weigh on the Australian dollar.
On the data front, Australia’s retail sales rose by 0.3% in January after a 0.1% decline in December, but consumer confidence dropped to 87.7 from 89.8.
The manufacturing sector showed some resilience, with the PMI revised slightly down to 50.4 in February but still higher than January’s 50.2, marking its strongest growth since early 2023.
Meanwhile, Australia’s TD-MI Inflation Gauge fell by 0.2% in February, reversing a previous 0.1% rise, indicating slowing inflation after the RBA’s recent rate cut. These figures reinforced expectations that further rate cuts could be on the horizon, keeping the Aussie dollar under pressure.
On the global side, China’s economic data showed signs of recovery, which could impact the AUD/USD pair. The Caixin Manufacturing PMI rose to 50.8 in February from 50.1, exceeding market expectations. Similarly, the official NBS Manufacturing PMI climbed to 50.2 from 49.1, suggesting stronger industrial activity. The Non-Manufacturing PMI also improved, reaching 50.4.
Therefore, the AUD/USD pair remains under pressure as expectations of RBA rate cuts weaken the Aussie dollar, while improved Chinese data offers limited support, failing to offset broader economic concerns and weaker sentiment.
US Tariffs Spark Trade War Fears, Weighing on AUD/USD
On the geopolitical front, the tensions rose after US President Donald Trump confirmed new tariffs on Canada, Mexico, and China. Markets were unsure if Trump would extend the deadline before Monday, as these countries had been making efforts to meet US demands.
However, he moved forward with the tariffs starting Tuesday, fueling uncertainty in global trade. This decision added pressure on market sentiment, affecting risk-sensitive assets like the Australian dollar (AUD).
In response, Canada and China announced retaliatory tariffs against US imports. Canada’s Prime Minister Justin Trudeau stated that Canada would impose 25% tariffs on US goods worth C$30 billion from Tuesday, with additional tariffs on C$125 billion of products coming in 21 days.
Similarly, China’s Commerce Ministry declared new tariffs of up to 15% on key US agricultural products, including chicken, pork, soy, and beef, effective from March 10. These countermeasures heightened trade war concerns, weighing on market confidence.
For the AUD/USD pair, this trade dispute adds bearish pressure. The Australian dollar is highly sensitive to global trade conditions, particularly due to its strong economic ties with China.
Increased tariffs between the US and China could hurt demand for Australian exports, weakening the AUD against the USD. Traders will closely watch further developments, as any signs of easing tensions could help the Aussie dollar recover.
AUD/USD – Technical Analysis
The Australian dollar is trading at $0.62062, slipping below its pivot point of $0.62494 as sellers maintain control. The short-term trend remains bearish, with the pair struggling to regain traction above key technical levels.
The 50-day EMA at $0.62496 is acting as immediate resistance, reinforcing the near-term downside risk. A failure to reclaim this level could extend losses toward the first support at $0.61885, with additional downside potential toward $0.61407 and $0.60880 if bearish momentum intensifies.
On the upside, a breakout above $0.62494 could trigger a move toward the first resistance at $0.63034, with further bullish targets at $0.63546 and $0.64064. However, sustained buying pressure is required to confirm a shift in momentum.
Given the recent weakness, traders may consider buying above $0.61885, targeting a move toward $0.62499, with a stop-loss set at $0.61529 to manage downside risk.
Market participants should monitor broader macroeconomic factors, including U.S. dollar strength and risk sentiment, which continue to influence AUD/USD.
Rising U.S. bond yields and Federal Reserve rate expectations may keep pressure on the pair, while any improvement in global risk appetite could provide support for the Australian dollar.
Technical traders should watch for increased volume near key support levels, as a bounce from $0.61885 could indicate renewed buying interest. However, a break below this level would expose AUD/USD to further downside, reinforcing the bearish outlook.
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