- The AUD/USD outlook paints uncertainty as traders weigh the impacts of Trump’s decisions.
- Analysts have downgraded the outlook for growth in China and the US.
- The US PMI report revealed weaker business activity.
The AUD/USD outlook paints uncertainty as traders weigh the impacts of Trump’s decisions and comments on the global economy. Moreover, the Aussie lacked direction due to the dimming outlook for growth in the US and China.
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The dollar rebounded recently after Trump retracted his comments about firing the Fed Chair. However, the rally had little impact on the AUD/USD price. Market participants are more focused on the impact of recent developments on the global economy.
Analysts have downgraded the outlook for growth in China and the US due to the recent tariff war. Australia will suffer if the Chinese economy slows further, as it is its largest trading partner. Therefore, an escalation in the trade war will likely hurt the Australian dollar.
However, the dollar will also fall in the event of a US recession. This will allow the Aussie to remain steady. Fortunately, recent comments from the White House have shown a willingness to lower tariffs on China. However, the US has said it will not be the first to move. If tariffs can come down, the two countries might work on a trade deal to end the war.
Meanwhile, market participants watched the US PMI report, which revealed weaker business activity. The composite PMI fell from 53.5 to 51.5 as service sector business activity dropped. More downbeat data will increase pressure on the Fed to cut interest rates.
AUD/USD key events today
- Unemployment Claims
AUD/USD technical outlook: 0.6400 key resistance triggers sideways move
On the technical side, the AUD/USD price trades in a tight range around the 0.6400 key psychological level. Initially, bulls were in the lead, keeping the price above the 30-SMA. However, bears are getting stronger and have punctured the SMA. At the same time, the RSI has punctured the 50 level, showing stronger bearish momentum.
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However, at the moment, price action can only be described as ranging. It is not making higher highs or lower lows, meaning bears and bulls are almost equally matched. If bears become stronger, AUD/USD will target the 0.6200 key level. On the other hand, if bulls regain momentum, the price will break above 0.6400 to make new highs and continue the uptrend.
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Saqib Iqbal
