The Australian Dollar (AUD) regains ground on Monday, buoyed by encouraging economic data from China. Figures released by China’s National Bureau of Statistics (NBS) showed that the Manufacturing Purchasing Managers’ Index (PMI) rose to 50.5 in March, up from 50.2 in February and in line with market expectations. Meanwhile, the Non-Manufacturing PMI climbed to 50.8, exceeding the 50.5 forecast and February’s reading of 50.4.
Despite this boost, the AUD’s upside remains capped due to ongoing global trade tensions, particularly ahead of US President Donald Trump’s anticipated announcement on reciprocal tariffs this Wednesday. Investors are also turning their attention to the Reserve Bank of Australia’s (RBA) interest rate decision on Tuesday. The central bank is widely expected to keep rates steady at 4.1% as it navigates economic uncertainties, including inflation concerns and potential trade disruptions from US policies.
US Inflation and Fed Rate Cut Expectations
In the US, inflation data released on Friday showed that the Personal Consumption Expenditures (PCE) Price Index increased 2.5% year-over-year in February, matching expectations. The core PCE, which excludes food and energy, rose 2.8% annually—slightly above the previous month’s revised 2.7% figure. On a monthly basis, the core gauge climbed 0.4%, marking the largest gain since January 2024.
Meanwhile, personal income jumped 0.8% in February, while consumer spending rose 0.4%. Swaps traders are currently pricing in two quarter-point Fed rate cuts this year, with the first expected in July, according to the CME FedWatch tool. San Francisco Fed President Mary Daly stated on Friday that while she anticipates two rate cuts in 2024, the Fed will monitor economic resilience and tariff-related costs before making any moves.
Technical Outlook: AUD/USD Faces Key Resistance
The AUD/USD pair trades positively but remains confined within a symmetrical triangle pattern, suggesting continued consolidation. The price remains below the 100-day Exponential Moving Average (EMA), maintaining a bearish bias, though the 14-day Relative Strength Index (RSI) at the midline signals neutral momentum.
Key resistance lies at 0.6330, the March 26 high. A breakout above this level could drive the pair toward 0.6355 (100-day EMA) and 0.6375, the upper boundary of the triangle. On the downside, initial support is at 0.6262 (March 24 low), with further declines potentially dragging the pair toward 0.6225 and 0.6186 (March 4 low).
As markets await the RBA decision and further US economic indicators, the AUD/USD pair remains at a critical juncture, with trade policy uncertainty and central bank signals likely to dictate its next move.
Related Topics:
