Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6350.
- Add a stop-loss at 0.6200.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6200.
- Add a stop-loss at 0.6350.
The AUD/USD exchange rate continued its downtrend and approached a key support level as the US dollar index rebounded. It dropped to a low of 0.6270, down from this month's high of 0.6390.
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US dollar index rises
The AUD/USD pair retreated even after Judo Bank published strong flash PMI numbers from Australia. The headline manufacturing PMI rose from 50.4 in February to 52.6 in March, a sign that the industry continued its expansion trajectory.
Another report showed that the services PMI rose from 50.8 in February to 51.2 in March. This is a notable figure since the services sector is the biggest part of the Australian economy.
The Australian dollar retreated as the US dollar index jumped followed reports that Donald Trump’s reciprocal tariffs will have exemptions, especially high technology items like vehicles and semiconductors. This report led to hopes that Trump will be more flexible when implementing his tariffs on imported goods.
There will be no economic data from Australia this week, meaning the key driver for the AUD/USD pair will be the upcoming data from the United States. The first key data to watch will be consumer confidence, which will provide more information about the health of the biggest part of the economy.
Economists expect the data to show that consumer confidence continued its downtrend this month as many of them anticipated the upcoming tariffs by Donald Trump. The expectation is that most of these tariffs will lead to higher inflation this year.
Consumers are also concerned about the ongoing job cuts by Elon Musk’ Department of Government Efficiency (DOGE). Analysts expect that these layoffs and tariffs will affect economic growth. As such, the estimate is that the consumer confidence dropped from 98.3 in February to 94.3 in March. It has been in a strong downward trend in the past few months.
AUD/USD technical analysis
The AUD/USD exchange rate has been in a strong downward trend in the past few weeks. It has moved from this month's high of 0.6390 to a low of 0.6260.
The pair has moved below the 50-day and 25-day moving averages, a sign that bears are in control for now.
However, the pair has formed an ascending channel and is about to move to its lower side. Therefore, there is a likelihood that the pair will resume the uptrend and retest the upper side at 0.6390. A move below the lower side of the channel will invalidate the bullish outlook.
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