AUD/USD Price Analysis – March 11, 2025
Daily Price Outlook
Despite deepening deflationary concerns in China, the Australian Dollar (AUD) has regained traction against the US Dollar (USD), trading around the 0.6289 level.
However, the weaker US Dollar and market expectations of Federal Reserve rate cuts have provided support to the AUD/USD pair, even as trade tensions and economic uncertainty persist.
China's Deepening Deflationary Pressures
On the data front, China’s Consumer Price Index (CPI) dropped by 0.7% year-over-year in February, worse than the expected 0.5% decline.
This is the first time China has experienced consumer deflation since January 2024, mainly due to weaker demand after the Spring Festival.
Monthly CPI inflation also fell to -0.2%, showing low price pressures in the Chinese economy. Since China is Australia’s biggest trading partner, its slowdown is affecting the Australian Dollar.
AUD/USD Finds Support Amid Weaker US Dollar and Rate Cut Speculation
Despite these headwinds, the AUD/USD pair found support as the US Dollar struggled. The US Dollar Index (DXY) remains subdued around 103.80, as concerns over tariff policy uncertainty and weaker US labor market data have reinforced expectations of multiple Federal Reserve rate cuts this year.
On the data front, the February’s Nonfarm Payrolls (NFP) report showed only 151,000 new jobs, missing the 160,000 forecast and adding to speculation that the Fed will ease monetary policy.
Traders now anticipate a total of 75 basis points (bps) in rate cuts, with a June cut fully priced in. The Federal Reserve’s blackout period ahead of its March 19 meeting has limited further guidance, keeping market focus on upcoming economic data, particularly the February Consumer Price Index (CPI) report.
Australia’s Economic Developments and RBA Outlook
At home, Australia’s economic data has been mixed. The Westpac Consumer Confidence index rose 4% in March to 95.9, reaching its highest level in three years.
The improved sentiment is attributed to the Reserve Bank of Australia's (RBA) rate cut in February and easing cost-of-living pressures.
However, Australia’s 10-year government bond yield declined to 4.39% as escalating global trade tensions dampened investor appetite for risk.
The RBA’s policy outlook remains a focal point, especially after stronger-than-expected economic growth reduced expectations of additional rate cuts.
The latest RBA Meeting Minutes signaled a cautious stance, clarifying that February’s rate cut does not indicate a broader easing cycle.
Geopolitical and Trade Uncertainty Weigh on Sentiment
Apart from this, trade tensions between the US and China are still unresolved, adding to the uncertainty. China started new tariffs on some US farm products on Monday after the US raised tariffs on Chinese imports from 10% to 20%.
China also put a 100% tariff on Canadian rapeseed oil and other farm goods, making global trade more uncertain.
Meanwhile, US Commerce Secretary Howard Lutnick confirmed that the 25% tariffs on steel and aluminum imports will take effect on Wednesday, despite calls from US businesses for postponement.
These protectionist measures have heightened concerns over a global economic slowdown, influencing market sentiment and adding to volatility in currency markets.
Looking ahead, traders will closely monitor the US CPI release for further clues on inflation trends and Federal Reserve policy direction.
AUD/USD – Technical Analysis
The AUD/USD pair is trading at $0.62633, slipping 0.05% as the market struggles to find bullish momentum. The pair remains under pressure, trading below the pivot point of $0.62829, signaling a bearish bias in the short term.
The 50-day EMA at $0.63087 serves as immediate resistance, reinforcing downward pressure on the Australian dollar. A break above this level could push the pair toward $0.63287, with further resistance at $0.63650 and $0.64051.
On the downside, immediate support stands at $0.62465. A decisive break below this level could expose the pair to $0.62201, with deeper losses potentially extending to $0.61875. The overall structure remains weak, with sellers controlling price action as risk sentiment continues to weigh on the currency.
For traders, the technical setup suggests a sell position below $0.62826, targeting $0.62468, with a stop loss at $0.63092.
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