Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6515.
- Add a stop-loss at 0.6250.
- Timeline: 1-3 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6250.
- Add a stop-loss at 0.6515.
The Australian dollar soared to the highest level since February 21 after the strong Chinese economic data and as the market embraced a risk-on sentiment. The AUD/USD pair rose to a high of 0.6390, up by 5% from its lowest level in 2025.
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China economic data and risk-on sentiment
The AUD/USD pair rose after a report released on Monday showed that the Chinese economy was doing well. Fixed asset investments rose from 3.2% in January to 4.1% in February, higher than the median estimate of 3.2%.
Industrial production rose by 5.9%, higher than the median estimate of 5.3%, while retail sales rose by 4.0%. These numbers mean that the economy is doing well, helped by the stimulus packages implemented by the Chinese government.
Chinese economic numbers are important for Australia because it is the biggest buyer of its goods like coal and iron ore.
The AUD/USD pair rose as the market embraced a more risk-on sentiment, which led to a 0.30% crash of the US dollar index. US stocks jumped for the second consecutive days, with the Dow Jones and Nasdaq 100 indices rising by over 1%.
The risk-on sentiment came as investors embraced the new normal of higher inflation and tariffs. One reason is that investors expect the Federal Reserve will support the market by pointing to more rate cuts when it meets on Wednesday.
The only data to watch on Tuesday will be the upcoming building permits, housing starts, and export and import price index number. While important, these numbers will not have a big impact on the US dollar.
AUD/USD technical analysis
The daily chart shows that the AUD/USD pair bottomed at 0.6085 earlier this year and then bounced back to 0.6390 on Tuesday morning. It has moved close to the 38.2% Fibonacci Retracement point at 0.6412.
The pair has moved above the upper side of the ascending triangle pattern and the key resistance level at 0.6350, the lowest swing on August 5. It has also moved above the 50-day and 100-day moving averages, while the MACD and the Relative Strength Index (RSI) have pointed upwards, a sign that it is gaining momentum.
Therefore, the pair will likely keep rising as bulls target the 50% retracement level at 0.6515. A drop below the support at 0.6300 will invalidate the bullish outlook.
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