The Australian Dollar (AUD) continues its winning streak against the US Dollar (USD) for a sixth consecutive session, supported by a combination of stronger-than-expected data, improved global risk sentiment, and a subdued USD outlook. The AUD/USD pair remains firmly above the 0.6300 mark on Wednesday, maintaining its bullish momentum after the release of key economic data from Australia and China, along with ongoing trade uncertainties.
China’s Strong Economic Data Lifts AUD Sentiment
Australia’s economy has benefitted from positive developments in China, its largest trading partner. In the first quarter of 2025, China’s GDP grew at an annual rate of 5.4%, exceeding market expectations of 5.1% and matching the pace of Q4 2024. Despite a slight slowdown in quarterly growth (1.2% vs. the forecasted 1.4%), the overall outlook remains positive. Furthermore, China’s March Retail Sales surged 5.9% year-over-year, surpassing expectations of 4.2%, while Industrial Production rose by 7.7%, well above the forecast of 5.6%. These upbeat figures have supported commodity-driven currencies like the AUD, as China remains a key buyer of Australian exports.
US Dollar Subdued Amid Economic Uncertainty and Trade Tensions
The US Dollar (USD) is trading lower near 99.80 on the US Dollar Index (DXY) as concerns about the US economy mount. Investor sentiment has been dampened by ongoing trade tensions between the US and China, as well as the uncertainty surrounding President Trump’s tariffs. The recent escalation in tariffs on US goods by China—raising tariffs from 84% to 125%—has added to fears of a global economic slowdown. Additionally, US inflation data for March revealed a slowdown, with the Consumer Price Index (CPI) easing to 2.4% year-over-year, down from 2.8% in February. This was below market expectations of 2.6%, adding to concerns about weaker economic activity.
RBA’s Cautious Outlook Amid Global Uncertainty
Despite a resilient economic outlook in Australia, the Reserve Bank of Australia (RBA) remains cautious. The minutes from the RBA’s March meeting showed that trimmed mean inflation fell below 3%, while consumer demand appeared to be recovering. However, there is uncertainty surrounding future policy actions, and markets are pricing in a 25-basis point rate cut in May, with further easing expected later in the year. The upcoming Australian employment report on Thursday will be closely watched for signs of strength or weakness in the labor market, which could influence the RBA’s next move.
Technical Outlook: AUD/USD Remains Bullish
The technical outlook for AUD/USD remains positive, as the pair holds firm above key moving averages. The 9-day and 50-day Exponential Moving Averages (EMAs) continue to support the ongoing upward momentum. The 14-day Relative Strength Index (RSI) remains above the neutral 50 mark, indicating that bullish momentum is intact.
On the upside, a break above the 0.6400 psychological level could lead to a retest of the four-month high at 0.6408, last seen on February 21. Initial support is seen at the 50-day EMA near 0.6273, followed by the 9-day EMA at 0.6262. A drop below these levels would challenge the short-term bullish trend and could open the door for a move toward 0.5914—the lowest level since March 2020—and the critical 0.5900 mark.
Focus on US Retail Sales and Global Economic Developments
Looking ahead, traders will focus on the upcoming US Retail Sales data for March, which could provide insight into the impact of tariff concerns on consumer behavior and overall economic growth. Meanwhile, the ongoing global trade tensions and expectations of further monetary easing by the Federal Reserve and People’s Bank of China (PBoC) will continue to shape investor sentiment and influence the direction of AUD/USD.
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