- The AUD/USD forecast indicates easing fears of a rapid slowdown in Australia’s economy.
- Trump threatened to increase tariffs on Chinese imports.
- Market participants are eagerly awaiting a speech from the RBA governor.
The AUD/USD forecast indicates easing fears of a rapid slowdown in Australia’s economy. As a result, the Australian dollar steadied after collapsing to a five-year low. Meanwhile, the dollar remained frail after Trump threatened new tariffs on China.
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Australia’s Treasurer Jim Chalmers calmed markets when he said the country would manage the impact of Trump’s tariffs. Initially, the Australian dollar had plunged due to fears of a recession. Market participants started pricing a massive rate cut at the next RBA meeting. At the same time, Trump’s tariffs on China hurt the yuan, further dragging down the Aussie. However, Australian officials are confident that the economy will continue growing.
Elsewhere, the dollar was fragile on Wednesday after Trump threatened to increase tariffs on Chinese imports. The threat came after China promised counter-tariffs starting Thursday. Additional tariffs on China will escalate the war between the two major economies.
Moreover, it will increase the risk of a recession, especially in the US. Consequently, traders are dumping the dollar and buying safer currencies like the yen. At the same time, Treasury yields are falling with rising Fed rate cut expectations.
Market participants are eagerly awaiting a speech from RBA governor Michelle Bullock. At the same time, the US will release crucial inflation data this week.
AUD/USD key events today
- FOMC policy meeting minutes
AUD/USD technical forecast: Bearish momentum fades near 0.6002
On the technical side, the AUD/USD price is trading in a tight bearish channel near the 0.6002 key level. The channel comes after a sharp decline that broke below the 0.6200 key support level. Moreover, the price still trades well below the 30-SMA, showing bears are in the lead. Meanwhile, the RSI is under 50, suggesting solid bearish momentum.
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However, price action shows that bulls are getting stronger. As a result, the price is not making significant moves below previous lows. At the same time, the RSI has made a bullish divergence, indicating fading bearish momentum.
This means that bulls might soon overpower bears. However, a bullish move might not go beyond the 30-SMA. If the SMA holds firm, the downtrend will continue with bears targeting the 0.5901 support level.
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Saqib Iqbal
