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AUD/USD Currencies

Australian Dollar Finds Strength As Firm Domestic Jobs Data and Lessening Global Trade Tensions Boost AUD vs. USD

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  • May 15, 2025
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Australian Dollar (AUD) is gaining strength versus the US Dollar (USD) as better-than-anticipated domestic jobs data and lessening global trade tensions provide support. In April, Australia created 89,000 jobs—well above the predicted 20,000—while unemployment remained at 4.1%. This strong labor market performance, combined with the easing of US-China trade tensions and the removal of tariffs, has strengthened risk appetite among investors, underpinned demand for risk-sensitive currencies such as the Aussie. Despite softening market expectations for interest rate reductions by both the US Federal Reserve and the Reserve Bank of Australia, the AUD/USD pair is trading around 0.6440 and could retest key levels of resistance if good momentum persists. KEY LOOKOUTS • Markets currently anticipate the Reserve Bank of Australia (RBA) to lower the cash rate to approximately 3.1% by the end of the year, with a 25-basis-point reduction most likely at the next policy meeting. Any variation from this might affect AUD performance. • Traders will watch closely for the next US Retail Sales and Producer Price Index (PPI) releases for April, which might change sentiment around the US Dollar and affect AUD/USD movement. • The initial US-China tariff rollback deal is improving risk sentiment; further advances—or setbacks—have a real chance of influencing the Australian Dollar in a substantial way. • AUD/USD is reaching pivotal resistance at 0.6515. A sustained break above this level would serve to induce further advancement towards the seven-month high of 0.6687. Australian Dollar’s direction will depend on a number of crucial factors. The Reserve Bank of Australia’s next policy decision is in sharp focus, as markets are pricing a 25-basis-point rate cut, although better domestic data might alter the bank’s tone. On the international front, de-escalating US-China trade tensions remain supportive of risk appetite, but any reversal has the potential to easily spoil AUD gains. Meanwhile, future US economic data such as Retail Sales and PPI levels may influence Federal Reserve rate expectations and put downward pressure on the US Dollar. Technically, AUD/USD is capped by resistance at around 0.6515; a firm breakout above this level may lead to further gains to 0.6687. Australian Dollar’s tone is still underpinned by robust job statistics and declining global trade tensions. Market attention now turns to the next RBA policy meeting and major US economic data. A break above 0.6515 would suggest further strength in AUD/USD. • Australia created 89,000 jobs in April, much more than the predicted 20,000, as the unemployment rate remained at 4.1%. • AUD/USD pair retraced around 0.6440 amid solid employment data and risk-on appetite. • Global trade tensions relaxed with the US and China agreeing to reverse tariffs, boosting investor sentiment. • US Dollar Index (DXY) lost strength, trading at 100.90 levels as investors wait for Retail Sales and PPI data. • Wage Price Index in Australia increased 3.4% YoY in Q1 2025, above forecast, indicating wage growth recovery. • Markets now anticipate the RBA to reduce rates to 3.1% by the end of the year, although robust data could impact future actions. • Major resistance for AUD/USD is at 0.6515, with possible upside to 0.6687 if bullish momentum prevails. Australian Dollar is being supported by robust domestic economic indicators and strengthening global trade conditions. April’s employment report was marked by a staggering increase of 89,000 jobs, well surpassing forecasts and highlighting the strength of Australia’s labor market. Meanwhile, the unemployment rate remained at 4.1%, following sustained stability in the employment sector. There were also positive developments in wage growth, with the Wage Price Index increasing 3.4% over the past year in the first quarter of 2025, rebounding from deceleration in earlier quarters. AUD/USD DAILY PRICE CHART CHART SOURCE: TradingView Globally, alleviating US-China trade tensions have helped instill a better mood in the market, stimulating appetite for risk-sensitive currencies such as the Australian Dollar. An initial agreement to ease tariffs on both sides has abated fears of extended economic tensions, lifting world trade sentiment. At the same time, changing expectations regarding US Federal Reserve interest rate cuts and Reserve Bank of Australia interest rate cuts are influencing investor mood, with markets waiting eagerly for further direction from future economic statistics and central bank announcements. TECHNICAL ANALYSIS AUD/USD currency pair is displaying bullish momentum, trading well above the nine-day Exponential Moving Average (EMA) of approximately 0.6429. The 14-day Relative Strength Index (RSI) is still well above the neutral 50 threshold, which suggests persistent buying interest. Should the pair hold above near-term support levels, it may gather energy for a possible push towards past highs. Failure to stay above critical moving averages will, however, undermine the short-term outlook and invite more consolidation. FORECAST Australian Dollar stands to gain from continued strengthening of Australia’s economic fundamentals and relaxing global trade tensions. If domestic statistics continue to impress and risk appetite is high, the AUD/USD exchange rate is likely to test higher prices, possibly retesting levels encountered in late 2024. Continued improvement in wage growth and a firming labor market could further add to investor confidence, promoting a more vigorous rally in the near term. Even with upbeat sentiment, the Australian Dollar is exposed to threats from possible changes in global economic trends and monetary policy. Deterioration in US-China relations or weaker-than-anticipated economic news out of Australia or its key trading partners would dampen sentiment. Moreover, if the Reserve Bank of Australia hints at a more conservative rate-cut policy or US economic signals provoke a relief rally in the US Dollar, the AUD/USD pair may face downward pressure, testing major supports.

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AUD/USD Currencies

Australian Dollar Under Pressure as US-China Trade Tensions and Global Economic Sentiment Weigh In

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  • April 11, 2025
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The Australian Dollar (AUD) continues to be under pressure as rising US-China trade tensions and soft global economic signals continue to bear down on investor sentiment. The White House confirmation that US tariffs on Chinese imports have risen to 145% has further fueled risk aversion, hurting the AUD because of Australia’s high trade exposure with China. Although the AUD was given temporary support by reports of renewed trade talks with the European Union, subdued local sentiment and forecasts of Reserve Bank of Australia interest rate cuts still weigh on its outlook. The US Dollar also has headwinds to contend with from softening inflation and general doubts regarding economic growth, keeping the AUD/USD currency pair highly volatile around significant technical levels. KEY LOOKOUTS • The series of ongoing tariffs increases and trade barriers between the US and China remains a major threat to the Australian Dollar, as Australia has close trade connections with China. • Markets are factoring in as much as 100 basis points of rate cuts by the Reserve Bank of Australia from May, which has the potential to put additional pressure on the AUD if it materializes. •  The US Producer Price Index (PPI) and Michigan Consumer Sentiment figures will determine USD strength and, consequently, the AUD/USD exchange rate. •  The AUD/USD is trading around 0.6190, supported by the 9-day EMA (0.6167) and capped by the 50-day EMA (0.6260). A break in either direction may determine the short-term trend. Investors are scrutinizing closely a handful of important variables that have the potential to define the near-term path of the Australian Dollar. The escalating US-China trade war, characterized by high tariff increases and retaliatory actions, remains a strong burden on the AUD because of Australia’s trade reliance on China. Simultaneously, rate cut expectations from the Reserve Bank of Australia are contributing to the currency’s negative outlook, with markets predicting a dovish turn as soon as May. Globally, focus shifts to coming US economic data such as the PPI and consumer sentiment figures that could drive the US Dollar and in turn the AUD/USD. Technically, the pair’s position close to key moving averages implies volatility in the offing with support at 0.6167 and resistance around 0.6260 set to dictate market direction. The Australian Dollar is under downward pressure due to heightened US-China trade tensions and RBA rate-cut expectations. Market direction in the near term is sought by traders in terms of key US economic statistics and technical thresholds at 0.6167 and 0.6260. • The US imposed additional tariffs of 145% on Chinese products, fueling the trade war and affecting global trade patterns. • Australia’s strong trade relationship with China exposes its economy and currency to being affected by disruption in China’s trade landscape. • China responded by boosting tariffs on 84% of US imports and blacklisting six US firms, ratcheting up trade tensions. • Australia will resume trade talks with the European Union with the objective of deepening and diversifying its trade relationships. • China showed interest in further developing trade and investment relationships with the EU as it pursues stability against increasing US tensions. • Sluggish consumer and business confidence is driving anticipation of a dovish move from the Reserve Bank of Australia. • Easing inflation and mixed economic data in the US are contributing to uncertainty and conservative market sentiment on the global stage. The Australian Dollar is under sustained pressure as tensions in international trade rise, especially between China and the United States. The announcement by the White House that US tariffs on Chinese exports have risen to 145% has increased anxiety on international trade stability. The issue is particularly pertinent for Australia, considering that it has strong economic relations with China. The ongoing conflict instills apprehension about diminished demand for Australian exports, leading to a conservative outlook for the currency. AUD/USD DAILY PRICE CHART CHART SOURCE: TradingView Domestically, Australian consumer and business confidence is underpinned by weak sentiment, which supports the view that the Reserve Bank of Australia might pursue a more dovish monetary policy stance in the months ahead. In the US, meanwhile, inflation data provided indicators that eased, while policymakers there are also watchful about striking a balance between growth and price stability. As global and local uncertainties are played out, markets will be keeping a keen eye on economic resilience signs and central bank policy reactions globally. TECHNICAL ANALYSIS The AUD/USD pair is trading close to 0.6190 with limited momentum as it continues to range about vital short-term moving averages. While the pair had a momentary respite, indicators point to the fact that market sentiment is still guarded. The Relative Strength Index (RSI) is languishing beneath the neutral 50 mark, signaling that there is no strong bullish sentiment. A protracted move in either direction might determine the direction for the next leg, with traders keeping a close eye on confirmation signs from wider market indicators and economic data. FORECAST Australian Dollar might get some support if Australia can restart trade talks with the European Union successfully, which would be a possible investment sentiment booster. Encouraging trends in China’s bid to increase trade with the EU could also calm regional trade sentiment, positively affecting the AUD indirectly. In addition, if US economic releases later this week fail to impress or if the Federal Reserve provides hints of a more conservative strategy in tightening, the US Dollar could lose strength, allowing space for a slight rebound in the AUD/USD pair. The Australian Dollar could experience more downward pressure in the short term because of the increasing tensions between China and the US, which threaten Australia’s export-oriented economy. With China raising tariffs on US products and blacklisting US businesses, the uncertainty in global trade could limit demand for Australian commodities. Moreover, poor local sentiment and increased expectations of rate cuts by the Reserve Bank of Australia may add to the drag on the AUD, leaving it exposed to falling if global risk aversion continues to intensify.

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