AUD/USD Price Analysis – March 18, 2025
Daily Price Outlook
During the European trading session, the AUD/USD pair remained sluggish around the 0.6371 level as the US dollar regained strength.
However, the greenback recovered from recent losses amid escalating geopolitical tensions in the Middle East. The US reaffirmed its stance on striking Yemen’s Houthis until they halt attacks on Red Sea shipping, further unsettling markets.
Moreover, US President Joe Biden warned Iran of consequences if it continued supporting the Houthi group in Yemen. The situation has fueled risk aversion, leading to a stronger US Dollar and pressuring the Aussie.
Despite this, the AUD/USD saw some support due to the China’s latest economic stimulus measures. Moreover, the US dollar could lose traction due to rising trade tensions and growing economic concerns in the US. The market remains cautious as investors assess the Federal Reserve’s policy stance and economic data.
AUD Faces Pressure from RBA Caution and US Trade Policies
On the AUD front, the Reserve Bank of Australia (RBA) remains cautious about rate cuts. RBA Assistant Governor Sarah Hunter said the bank is taking a careful approach to easing rates.
The February policy statement also showed this cautious stance, which is different from market expectations of big rate cuts. Hunter added that US policy decisions, especially on inflation, could affect Australia.
Further pressure on the Aussie came as President Biden reaffirmed plans to impose reciprocal and sectoral tariffs, specifically targeting steel and aluminum imports.
Biden ruled out exemptions, signaling tough trade measures that could impact Australian exports. Australian Prime Minister Anthony Albanese confirmed that Australia would not impose retaliatory tariffs, aiming to avoid inflationary effects on domestic consumers.
Therefore, the cautious stance of the RBA and trade tensions with the US could weigh on the AUD, leading to potential weakness in the AUD/USD pair, as market sentiment remains uncertain.
Chinese Economic Support Provides Some Relief to the AUD
On the other side, the Australian Dollar found some support from China’s latest economic stimulus measures. China recently introduced a special action plan to boost consumption, aiming to enhance market sentiment.
The plan includes wage increases, measures to encourage household spending, and efforts to stabilize stock and real estate markets.
China’s retail sales data showed a 4.0% year-over-year increase in January-February, improving from December’s 3.7% rise.
Meanwhile, industrial production rose by 5.9% YoY, surpassing the 5.3% forecast but slightly lower than the previous reading of 6.2%. These indicators suggest steady growth in China, which could help cushion the AUD/USD pair from further downside.
Weak US Data and Consumer Confidence Pressure the US Dollar
On the US front, the broad-based US Dollar Index (DXY) hovered around 103.50, struggling due to weak US economic data and uncertainty surrounding Biden’s tariff threats. US Retail Sales figures for February increased by just 0.2%, falling short of the expected 0.7% gain.
January’s data was also revised lower to -1.2% from -0.9%, signaling weaker consumer spending and raising concerns about a potential economic slowdown.
Moreover, the University of Michigan’s Consumer Sentiment Index fell to 57.9 in March, marking its lowest level since November 2022.
The decline in consumer confidence further pressured the US Dollar. However, the Fed is expected to maintain its current policy stance, with markets awaiting the outcome of its two-day meeting.
Therefore, weak US data and declining consumer confidence weighed on the USD, limiting its strength. This could support the AUD/USD pair, but RBA caution and trade tensions may cap significant gains.
AUD/USD – Technical Analysis
The AUD/USD pair is trading at $0.63698, showing slight downward movement as it struggles to maintain bullish momentum.
The price remains below the pivot point at $0.63844, indicating that sellers still have control in the short term. With the 50-day EMA at $0.63137, the broader trend suggests a cautious outlook, with potential for further downside if key support levels fail to hold.
Immediate resistance stands at $0.64000, with additional hurdles at $0.64121 and $0.64260. A breakout above these levels could signal renewed buying interest, pushing the pair toward a short-term recovery. However, without a fundamental catalyst, upside movement appears limited.
On the downside, immediate support at $0.63573 remains critical. A break below this level could lead to a test of $0.63402, followed by $0.63266, reinforcing the bearish sentiment.
A break below $0.6384 could accelerate downside momentum, making $0.63540 a viable target for short sellers. Conversely, a move above $0.64000 may shift sentiment toward a temporary bullish correction.
Related News
- GOLD Price Analysis – March 18, 2025
JOIN LHFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.