AUD/USD Price Analysis – March 25, 2025
Daily Price Outlook
During the European trading session, the AUD/USD currency pair remained steady, trading around 0.6319, with an intra-day high of 0.6323.
Despite some underlying challenges, the Australian Dollar (AUD) has been supported by expectations of a cautious approach from the Reserve Bank of Australia (RBA), along with the anticipation of continued Chinese stimulus to boost the Australian economy.
However, the pair faces some challenges from growing concerns over the Australian government's budget deficit and the potential impact of US trade policies.
Australia's Budget Deficit and Economic Outlook
The Australian economy faces a rising budget deficit, with the Treasury projecting a deficit of A$27.6 billion for 2024-25, widening to A$42.1 billion in 2025-26. Despite this, Australia's GDP growth is expected to stabilize at 2.25% in fiscal 2026 and 2.5% in fiscal 2027.
The Australian Treasurer, Jim Chalmers, also announced new tax cuts totaling approximately A$17.1 billion, aimed at garnering political support ahead of upcoming elections.
While these measures could support domestic consumption, the growing budget deficit raises concerns about fiscal sustainability and may limit the Australian government's ability to respond to future economic challenges.
Investors are also looking ahead to the RBA's decisions, with many speculating that the central bank will keep interest rates unchanged in April after its first rate cut in four years in February.
Moreover, the Australian economy continues to benefit from its strong trade ties with China, particularly as Chinese policymakers implement measures to stimulate domestic consumption and revitalize their economy.
US Dollar Strengthened by Services PMI Surge
On the US front, the US dollar strengthened amid a surge in the Services PMI, which climbed to 54.3 in March from 51.0 in February, signaling a robust rebound in business activity. The increase in the Services PMI marked a three-month high, further indicating economic resilience despite mixed signals from other sectors.
Meanwhile, the S&P Global US Composite PMI also rose to 53.5, up from February's 51.6, highlighting continued expansion in the economy. However, the US manufacturing sector experienced a slowdown, with the Manufacturing PMI dropping to 49.8, falling short of market expectations.
The US Dollar Index (DXY) has remained stable around 104.30, buoyed by these positive services sector data. While inflation remains a concern for the Federal Reserve, the hawkish stance of Fed Chair Jerome Powell, who noted that inflation is moving closer to the 2% target, has provided support for the USD.
Therefore, the stronger US dollar, driven by robust services sector data and Fed's hawkish stance, likely puts downward pressure on the AUD/USD pair, as the USD outperforms the AUD.
Geopolitical Risks and US Trade Policies Impact on AUD/USD
Despite positive data from both the US and Australia, the AUD/USD pair faces risks due to uncertainty around US trade policies. US President Trump's upcoming tariff announcement in early April could affect global trade and economic growth. Although Trump suggested some countries might be exempt from the tariffs, the full details of the plan are still unclear, leaving traders cautious.
Additionally, there are concerns that the US economy could slow down due to trade tensions and the impact of tariffs on key industries like agriculture and coal. These factors could add volatility to the AUD/USD pair, as traders weigh the strong US Dollar against the potential risks to Australia's economy.
AUD/USD – Technical Analysis
The Australian Dollar (AUD/USD) is treading water around $0.62861 in Tuesday’s early European session, showing little change on the day.
Despite the neutral tone, price action is gradually aligning with a short-term bullish bias, underpinned by support above the pivot point at $0.62679.
The 4-hour chart reveals consolidation just beneath the 50-period EMA at $0.63170—a level that’s currently acting as a dynamic resistance ceiling.
A decisive move above $0.63172, the immediate resistance level, would confirm bullish control and could open the door toward the next upside targets at $0.63510 and $0.63907.
These levels coincide with recent supply zones, where sellers have historically emerged. Sustained momentum above the 50-EMA could also suggest that buyers are preparing for a broader recovery leg.
On the downside, immediate support is located at $0.62342, followed by $0.61966 and the deeper floor at $0.61599.
A break below $0.62679 would negate the bullish setup and increase the risk of a slide toward those lower supports.
The broader context remains mixed, with AUD/USD reacting to shifting U.S. rate expectations, commodity sentiment, and Asia-Pacific macro data.
For now, the technicals suggest cautious optimism, but confirmation above $0.63172 is needed before bulls can fully commit to higher targets.
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