Tuesday was the second day the Australian dollar (AUD) has gained ground against the US dollar (USD), rising from 0.6131, the lowest point since April 2020. As the AUD benefited from strong commodity prices, the AUDUSD pair gained momentum.
AUD Bullish Recovery: What is the Reason
According to American President-elect Donald Trump's financial squad, a gradual rise in import duties increased investor trust and supported riskier currencies like the AUD.
In addition, the S&P/ASX 200 Index ended a three-day downtrend on Tuesday by rising 0.2% to about 8,210. The recovery was driven by mining and energy companies, while Australian equities followed Wall Street's overnight advances as investors turned their attention from mega cap tech firms to other industries.
Data that traders examined revealed a second straight month-long decline in consumer confidence. Australia's Westpac Consumer Confidence Index, which dropped 0.7% to 92.1 points in January 2025, showed consumers' ongoing despair.
RBA Rate Decision on AUDUSD Price
As markets factor in a 75% chance of a rate decrease by the Reserve Bank of Australia (RBA) the following month, the AUDUSD pair is under pressure to decline. For more insight into the RBA's policy outlook, investors are anticipated to keep a tight eye on Australia's employment statistics, which are scheduled to be issued later this week.
China's latest stimulus measures also provided some support for the AUD. Because Australia and China are close trading partners, any modifications in China's economic situation might greatly impact Australian markets.
AUDUSD Forecast Technical Analysis
In the daily chart of AUDUSD, the current price is trading at a record low with no sign of a significant bullish recovery. It signals an ongoing bearish pressure, which is more likely to extend in the coming days.
In the broader outlook, there are three consecutive bearish months, where December 2024 showed the largest loss to bulls. Moreover, the high volume line since April 2024 is above the current price, and working as a resistance.
Based on this context, the downside pressure might extend as long as the 50 day EMA remains above the current price. However, the slower market at the record low could attract institutional bulls any time. For that, overcoming the 0.6302 swing high could be a primary bullish signal, aiming for the 0.6500 level. However, any significant selling pressure from the 50 day EMA could be a bearish continuation, targeting the 0.6000 psychological line.
