The Australian Dollar (AUD) has regained some ground on Monday, bolstered by positive economic data out of China. The latest figures showed that China’s NBS Manufacturing Purchasing Managers’ Index (PMI) rose to 50.5 in March, up from 50.2 in February, meeting market expectations. Meanwhile, the NBS Non-Manufacturing PMI also improved to 50.8 from 50.4, slightly exceeding the 50.5 forecast.
Despite this positive data, the upside for AUD remains capped due to global trade concerns, particularly ahead of US President Donald Trump’s planned announcement of reciprocal tariffs on Wednesday. As traders await key developments, attention will shift to the Reserve Bank of Australia’s (RBA) interest rate decision on Tuesday. Economists expect the RBA to hold rates at 4.1% in April, after its first rate cut in four years last month, as the central bank waits out election uncertainty and evaluates the economic fallout from global trade tensions.
Supportive Chinese Data Boosts AUD, but Global Trade Concerns Weigh
Julian Evans-Pritchard, head of China economics at Capital Economics, commented that the official PMIs suggest infrastructure spending in China is on the rise, and that exports have remained resilient despite US tariffs. Meanwhile, China’s finance ministry is set to inject 500 billion yuan (about $69 billion) into the country’s four largest state banks to strengthen the financial sector, further supporting the outlook for Chinese economic growth.
Despite these positive developments in China, AUD’s upside could be limited due to the ongoing uncertainty surrounding US trade policies. The market will be closely watching the upcoming announcement by President Trump regarding new tariffs, with any escalation of trade tensions likely to dampen investor sentiment globally.
US Inflation Data and Rate Cuts Keep USD Pressure on AUD
US inflation data for February also showed a rise in the Personal Consumption Expenditures (PCE) Price Index by 2.5% YoY, in line with expectations. However, the core PCE Price Index, which excludes volatile food and energy prices, rose 2.8%, surpassing the market forecast and January’s 2.7% increase.
In response to these inflationary pressures, swaps traders are pricing in two quarter-point rate cuts from the Federal Reserve later this year, with the first cut expected in July. This dovish outlook for the USD continues to support AUD, although the bearish sentiment surrounding AUD remains due to ongoing global uncertainty.
AUD/USD Technical Outlook: Consolidation Within Symmetrical Triangle
AUD/USD continues to trade in positive territory for the day but remains within a symmetrical triangle pattern on the daily chart. Despite the brief recovery, the bearish bias persists, as the pair continues to trade below the 100-day Exponential Moving Average (EMA), signaling weak bullish momentum.
Upside Resistance: The first key resistance level lies at 0.6330, the high from March 26. A strong break above this level could signal a potential rally toward the 100-day EMA at 0.6355. Further upside could see the pair approach the upper boundary of the symmetrical triangle at 0.6375.
Downside Support: On the downside, initial support comes at the low of March 24, around 0.6262. If the pair breaks below this level, further selling could push it toward the lower boundary of the triangle at 0.6225, with additional support seen at the March 4 low of 0.6186.
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