AUD/USD pulls back ahead of the February high (0.6409) to carve a series of lower highs and lows.
By : David Song, Strategist
Australia Dollar Outlook: AUD/USD
AUD/USD pulls back ahead of the February high (0.6409) to carve a series of lower highs and lows, but the exchange rate may track the flattening slope in the 50-Day SMA (0.6266) should it hold above the monthly low (0.6187).
Australian Dollar Forecast: AUD/USD Pulls Back Ahead of February High
Keep in mind, AUD/USD no longer trades within the ascending channel from earlier this year following the six-day selloff in February, and the decline from the monthly high (0.6364) may persist as data prints coming out of China, Australia’s largest trading partner, cast a weakening outlook for the Asia/Pacific region.
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The update to China’s Consumer Price Index (CPI) showed a 0.7% contraction in February to mark the first negative print since January 2024, and the threat of a US-China trade war may push the Reserve Bank of Australia (RBA) to implement lower interest rates as ‘private domestic demand is recovering a little more slowly than earlier expected.’
In turn, the Australian Dollar may face headwinds ahead of the next RBA meeting on April 1 as the central bank starts to unwind its restrictive policy, but Governor Michele Bullock and Co. may carry out a gradual approach in lowering interest rates as ‘sustainably returning inflation to target within a reasonable timeframe remains the Board’s highest priority.’
With that said, AUD/USD may track the February range should it continue to hold above the monthly low (0.6187), but the exchange rate may struggle to retain the advance from the February low (0.6088) as it no longer trades within the ascending channel from earlier this year.
AUD/USD Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; AUD/USD on TradingView
- AUD/USD extends the decline from the monthly high (0.63640) to carve a series of lower highs and lows, and a break/close below the 0.6240 (61.8% Fibonacci extension) to 0.6270 (2023 low) zone may push the exchange rate towards the monthly low (0.6187).
- A break/close below the 0.6130 (23.6% Fibonacci retracement) to 0.6170 (2022 low) region opens up the February low (0.6088), but AUD/USD may face range bound conditions should it track the flattening slope in the 50-Day SMA (0.6266).
- Need a move back above 0.6318 (November 2023 low) to bring the monthly high (0.63640) on the radar, with the next area of interest coming in around the February high (0.6409).
Additional Market Outlooks
Gold Price Outlook Hinges on Response to Positive Slope in 50-Day SMA
US Dollar Forecast: USD/JPY Weakness Pushes RSI Towards Oversold Zone
British Pound Forecast: GBP/USD Holds Above Channel Resistance
EUR/USD Rally Persist Even as ECB Pursues Less Restrictive Policy
— Written by David Song, Senior Strategist
Follow on X at @DavidJSong
Click the website link below to read our Guide to central banks and interest rates in 2025
https://www.cityindex.com/en-au/market-outlooks-2025/FY-central-banks-outlook/
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