Daily Price Outlook
During the European trading session, the AUD/USD pair extended its gains, holding steady around the 0.6345 level as the US dollar remained under pressure amid improved risk sentiment and weaker US economic data.
Market confidence received a boost after the White House announced a temporary exemption for automakers from newly imposed import tariffs on Mexico and Canada.
Moreover, the administration is considering tariff exclusions for certain agricultural products. This development helped ease investor concerns, supporting risk-sensitive assets like the Australian Dollar.
Australia’s Trade and Economic Data Support AUD/USD
On the AUD front, the Australian economy continues to show strength, with positive trade and economic data boosting the AUD.
Australia’s trade surplus rose to 5,620 million in January, exceeding the expected 5,500 million and improving from the previous 4,924 million.
The rise in exports, particularly non-monetary gold, combined with a decline in imports, supported the trade balance.
Moreover, building permits in Australia surged by 6.3% in January, marking the second consecutive month of expansion and the fastest growth rate since July 2023. Therefore, the strong domestic data provided further support for the Australian Dollar, allowing it to maintain its gains against the Greenback.
US Dollar Weakens Amid Economic Concerns
On the US front, the broad-based US dollar faced downward pressure as economic concerns mounted. On the data front, the US ADP Employment Change for February reported only 77K new jobs, significantly below the forecast of 140K and the previous month’s 186K.
Investors are now awaiting the US Nonfarm Payrolls (NFP) report, which is expected to show a modest rebound to 160K jobs in February.
Meanwhile, the US ISM Manufacturing PMI came in slightly lower at 50.3 versus the expected 50.5, further fueling concerns about economic momentum. Moreover, the Federal Reserve’s Beige Book for March highlighted uncertainties stemming from Trump’s trade policies, signaling potential strain on economic activity.
Therefore, the weaker US economic data and Fed's Beige Book uncertainties pressured the USD, boosting AUD/USD. Investors anticipate a dovish Fed stance, supporting the Aussie as risk sentiment improves.
Geopolitical Tensions and China’s Economic Outlook Impact AUD/USD
Despite the strong domestic data, the Australian Dollar’s gains could be limited due to ongoing geopolitical tensions. However, the Chinese foreign ministry spokesperson stated that China is prepared to respond to any escalation in tariffs imposed by the US.
Given China’s status as Australia’s largest trading partner, heightened trade tensions could weigh on the Aussie Dollar.
On a positive note, China’s Services PMI unexpectedly rose to 51.4 in February from 51.0 in January, exceeding market expectations.
Additionally, Chinese authorities set a target of approximately 5% economic growth for 2025, with a 2% goal for the Consumer Price Index (CPI). These factors could provide some support to the Australian Dollar, given its close economic ties with China.
AUD/USD – Technical Analysis
AUD/USD is trading at $0.63392, showing resilience above its pivot point of $0.63386, as traders gauge market sentiment ahead of key U.S. and Australian economic data.
The pair has remained in a tight consolidation phase, but the short-term technical setup suggests a potential breakout if buying pressure intensifies.
The 50-day EMA at $0.62483 provides solid dynamic support, reinforcing the pair’s near-term bullish outlook. Immediate resistance stands at $0.63650, and a decisive break above this level could push AUD/USD toward $0.64051, where further bullish momentum may emerge.
A move past this resistance zone would set up a potential rally toward $0.64452, marking the next key level for traders to monitor.
On the downside, the immediate support level is at $0.63035, followed by $0.62681 and $0.62326. A breakdown below the pivot point could trigger selling pressure, exposing the pair to further declines, particularly if global risk sentiment weakens or the U.S. dollar strengthens on positive data.
Macroeconomic factors remain critical in shaping AUD/USD’s trajectory. The Australian dollar has found support from stabilizing commodity prices and expectations of a less aggressive Federal Reserve stance on interest rates.
However, any surprises in upcoming U.S. employment data or inflation readings could drive volatility in the pair.
For now, traders should watch for a sustained move above $0.63650 as confirmation of renewed bullish strength. A failure to break this resistance could lead to further consolidation, keeping the pair range-bound in the short term.
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