The Australian Dollar (AUD) recovered prior session losses and traded near 0.6390 against the US Dollar (USD) during Monday’s Asian session, supported by a combination of weaker USD sentiment, stable Chinese policy, and easing trade tensions.
The People’s Bank of China’s (PBoC) decision to keep its Loan Prime Rates unchanged (one-year at 3.10%, five-year at 3.60%) reassured markets, as did China’s Q1 GDP growth of 5.4% year-over-year, which beat expectations. Strong Chinese retail sales (+5.9%) and industrial production (+7.7%) further underscored robust demand from Australia’s largest trading partner.
Meanwhile, the US Dollar Index (DXY) fell to around 98.50, its lowest since April 2022, dragged by a sharp decline in the 2-year Treasury yield (down to 3.75%) and concerns over US tariffs. President Trump’s exemptions for key tech products—largely benefiting China—lifted the Aussie, which is sensitive to China’s trade outlook. However, tariffs on Chinese ships and Trump’s remarks hinting at tariff escalation keep tensions simmering.
Domestically, Australia’s unemployment rate rose slightly to 4.1% in March, while the Westpac Leading Index signaled a slowing growth outlook. Despite dovish RBA minutes and markets pricing in a 25 bps rate cut in May, the short-term AUD bias remains supported by global macro forces.
Technical View:
The AUD/USD pair holds above the nine-day EMA (~0.6325) and the 14-day RSI remains above 50, suggesting sustained bullish momentum. Immediate resistance lies at 0.6400, followed by 0.6408 (February high). A break above could open the path to 0.6515, the five-month high. On the downside, key support levels rest at 0.6325 and 0.6286 (50-day EMA), with a breach potentially exposing the March 2020 low at 0.5914.
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