Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6250.
- Add a stop-loss at 0.6425.
- Timeline: 1-2 days.
Bullish view
- Sell the AUD/USD pair and set a take-profit at 0.6425.
- Add a stop-loss at 0.6250.
The AUD/USD exchange rate bounced back sharply, continuing a trend that started a few days ago as the US dollar index (DXY) retreated. The pair jumped to a high of 0.6385 on Wednesday, its highest point since March 18. It has soared by 7.3% from its lowest point this month.
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Australian dollar surge continues
The AUD/USD pair continued its strong bullish trend this week after the Reserve Bank of Australia (RBA) revealed why it left interest rates unchanged in the last meeting. Minutes released on Tuesday showed that officials judged that the economy was doing well, helped by the February rate cut and tax cuts in the economy.
The bank hinted that it will be ready to cut interest rates later this year if the economy weakens further because of Donald Trump’s tariffs. He placed a 10% tariff on all Australian goods and a 145% levy on most Chinese goods. China is Australia’s biggest trading partner, meaning that a slowdown there will have implications.
The AUD/USD exchange rate rose after the US published mixed export and import price index and New York manufacturing index numbers. Data shows that the export price index rose by 2.4% in March, while the import figure fell to 0.9%. The NY Empire State Manufacturing Index moved to minus 8.1.
Worse, there are signs that the trade war between the US and China is not getting better. Beijing has now ordered its airlines to start avoiding Boeing airplanes, a big factor since its planes are the top US exports. However, China has been gravitating towards Airbus since the first trade war, meaning that the new restrictions will have a limited impact on the US.
AUD/USD technical analysis
The daily chart shows that the AUD/USD pair has been in a strong uptrend in the past few days as the US dollar crashed. It has soared from the year-to-date low of 0.5915 to a high of 0.6383. The current level is key since it has failed to move above it several times in the past.
Further, the pair has moved above the 50-day and 25-day Exponential Moving Averages (EMA), while the Relative Strength Index (RSI) has crossed the neutral point of 50. Therefore, while the pair’s outlook is bullish, there is a likelihood that it will pull back slightly and potentially retest the support at 0.6250 and then resume the uptrend.
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