The Australian Dollar (AUD) weakened against the US Dollar (USD) on Thursday, erasing gains from the previous session. The decline followed disappointing domestic employment data, adding pressure on the AUD/USD pair.
Australia’s Employment Change report showed a sharp drop of 52.8K jobs in February, a stark contrast to January’s revised gain of 30.5K and well below the expected 30.0K increase. Meanwhile, the seasonally adjusted Unemployment Rate held steady at 4.1%, aligning with market forecasts.
In China, the People’s Bank of China (PBOC) maintained its Loan Prime Rates (LPRs) on Thursday, keeping the one-year rate at 3.10% and the five-year rate at 3.60%.
Fed Policy and Global Trade Tensions Impact AUD/USD
The Federal Reserve left its benchmark interest rate unchanged at 4.25%–4.5% in its March meeting, as widely expected. The Fed reiterated its outlook for two rate cuts later this year but noted economic uncertainty linked to US President Donald Trump’s tariff policies.
Meanwhile, the US Dollar softened as US Treasury yields declined, with the 2-year yield falling to 3.97% and the 10-year yield at 4.24%. However, hawkish comments from Fed Chair Jerome Powell lent some stability to the Greenback. Powell stated that the labor market remains strong and inflation is edging closer to the Fed’s 2% target, though still somewhat elevated.
On the geopolitical front, President Trump and Russian President Vladimir Putin agreed to a temporary halt in strikes on energy infrastructure in the Ukraine war. However, Putin refused to endorse a broader month-long ceasefire negotiated between Trump’s team and Ukrainian officials, signaling ongoing tensions.
Trump also reaffirmed plans to impose sectoral and reciprocal tariffs on April 2, including restrictions on steel and aluminum imports. Additionally, his proposed tariffs on China-linked vessels entering US ports have triggered disruptions in the agriculture and coal industries, according to Reuters.
Australian Treasurer Jim Chalmers criticized Trump’s trade policies, labeling them “self-defeating and self-sabotaging” while condemning Australia’s exclusion from US steel and aluminum tariff exemptions. In a speech on Tuesday, Chalmers emphasized the need for economic resilience over trade retaliation.
Technical Outlook: AUD/USD Breaks Key Support Levels
The AUD/USD pair is trading near 0.6330, signaling a potential shift in market sentiment as it breaks below the lower boundary of an ascending channel. Despite the decline, the 14-day Relative Strength Index (RSI) remains above 50, suggesting some lingering bullish momentum.
Immediate resistance lies at the nine-day Exponential Moving Average (EMA) of 0.6337, which coincides with the channel’s lower boundary. A return above this level could restore bullish sentiment, with potential targets at the February 21 three-month high of 0.6408 and the channel’s upper boundary at 0.6490.
On the downside, key support is at the 50-day EMA at 0.6312. A decisive break below this level could weaken medium-term price momentum, exposing the AUD/USD pair to further losses toward the March 5 six-week low of 0.6187.
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