- The Aud/USD quotes near the 0.6270 region, without recovering land amid the persistent strength of the USD.
- A weak Australian labor report and the demand for sure refuge for the US dollar continue to weigh on Aussie.
- The technical indicators point to a greater descent while the torque is maintained below the key mobile socks.
The Aud/USD pair remained depressed during the American session below the 0.6300 barrier, since an American dollar (USD) stronger and the disappointing employment data of Australia continued to weigh weighing. The technical signals have become more and more bassists, since the indicators deteriorate and the price action breaks below important mobile socks.
What moves the market today: the Australian dollar weakens while the US dollar stands firm after the fed
- The Australian dollar (Aud) extended its losses per second session on Friday, pressed by both external and internal factors.
- The publication of a disappointing Australian employment report, which showed that the economy lost 52.8k put in February, well below the expectations of a 30K increase, generated new concerns about the weakness of the labor market.
- The US dollar was based on its rebound in the middle of the week, driven by the expectations that the Federal Reserve (FED) will maintain the interest rates high longer, after the highest inflation projections in the last summary of economic projections.
- Although the Fed maintained its unchanged policy rate, the updated tone bowed more towards a hard line posture, providing an impulse to the dollar.
- Geopolitical tensions and persistent uncertainty about US commercial policy also contributed to safe refuge flows, benefiting the US dollar.
- The comments of the US President Donald Trump about possible new tariffs and commercial measures of retaliation have kept cautious investors, a factor that particularly affects risk -sensitive currencies such as Aussie, given Australian’s strong commercial exposure to China.
- From an internal monetary policy perspective, the weak employment data increases the probability of greater relief by the Bank of the Australian Reserve (RBA). The RBA had already cut the rates at 25 basic points in February, and analysts now speculate that up to 75 basic points of additional relief could be necessary if economic data continue to disappoint.
AUD/USD Technical Analysis: The negative impulse is deepened with key levels overcome
The Aud/USD continued moving down during the American session on Friday, oscillating near the support zone of 0.6270, with bearish pressure dominating the day. The pair is firmly maintained below the simple mobile socks of 20 days and 100 days, confirming a deteriorated technical structure.
The indicator of convergence and divergence of mobile socks (MACD) printed a new red bar, while the relative force index (RSI) fell sharply to 44, remaining in negative territory. Both signs suggest that the impulse continues to favor the decline.
In terms of key levels, immediate support is observed around 0.6250, and a break below could trigger a greater decrease towards 0.6200. On the positive side, the resistance is about 0.6310, followed by a more significant barrier at 0.6340, where the pair could face sales pressure.
Faqs Australian dollar
One of the most important factors for the Australian dollar (Aud) is the level of interest rates set by the Australian Reserve Bank (RBA). Since Australia is a country rich in resources, another key factor is the price of its greatest export, iron mineral. The health of the Chinese economy, its largest commercial partner, is a factor, as well as inflation in Australia, its growth rate and trade balance. The feeling of the market, that is, if investors are committed to more risky assets (Risk-on) or seek safe shelters (Risk-Off), it is also a factor, being the positive risk-on for the AUD.
The Australian Reserve Bank (RBA) influences the Australian dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of the interest rates of the economy as a whole. The main objective of the RBA is to maintain a stable inflation rate of 2% -3% by adjusting the interest rates or the low. Relatively high interest rates compared to other large central banks support the AU, and the opposite for the relatively low. The RBA can also use relaxation and quantitative hardening to influence credit conditions, being the first refusal for the AU and the second positive for the AUD.
China is Australia’s largest commercial partner, so the health of the Chinese economy greatly influences the value of the Australian dollar (Aud). When the Chinese economy goes well, it buys more raw materials, goods and services in Australia, which increases the demand of the AU and makes its value upload. The opposite occurs when the Chinese economy does not grow as fast as expected. Therefore, positive or negative surprises in Chinese growth data usually have a direct impact on the Australian dollar.
Iron mineral is the largest export in Australia, with 118,000 million dollars a year according to data from 2021, China being its main destination. The price of iron ore, therefore, can be a driver of the Australian dollar. Usually, if the price of iron ore rises, the Aud also does, since the aggregate demand of the currency increases. The opposite occurs when the price of low iron ore. The highest prices of the iron mineral also tend to lead to a greater probability of a positive commercial balance for Australia, which is also positive for the AUD.
The commercial balance, which is the difference between what a country earns with its exports and what it pays for its imports, is another factor that can influence the value of the Australian dollar. If Australia produces highly requested exports, its currency will gain value exclusively for the excess demand created by foreign buyers who wish to acquire their exports to what you spend on buying imports. Therefore, a positive net trade balance strengthens the AUD, with the opposite effect if the commercial balance is negative.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
