The Australian Dollar Strengthens as USD Weakens Before PMI
The Australian Dollar strengthens as the US Dollar remains under pressure ahead of the ISM Manufacturing PMI release
FUNDAMENTAL OVERVIEW:
- The Australian Dollar strengthens after the TD-MI Inflation Gauge and China’s Manufacturing PMI data released on Monday.
- China’s Caixin Manufacturing PMI rose to 50.8 in February, up from 50.1 in January.
- Meanwhile, the US Dollar weakens as US PCE inflation data meets expectations, reducing fears of unexpected inflation surges.
The Australian Dollar (AUD) ended its six-day losing streak on Monday, supported by a weaker US Dollar (USD) after January’s Personal Consumption Expenditures (PCE) inflation data met expectations, easing concerns over inflation surprises in the US.
Australia’s TD-MI Inflation Gauge declined by 0.2% month-over-month in February, reversing January’s 0.1% rise. This was the first drop since last August and followed the Reserve Bank of Australia’s (RBA) decision to lower its cash rate by 25 basis points to 4.1% in its first policy meeting of the year, signalling continued moderation in inflation. On an annual basis, the gauge increased by 2.2%, slightly below the previous 2.3% rise.
The Australian Dollar (AUD) gains support from stronger-than-expected Chinese economic data, as China’s Caixin Manufacturing PMI climbed to 50.8 in February from 50.1 in January, surpassing market forecasts of 50.3. Given China’s significance as Australia’s key trading partner, the upbeat data bolstered the AUD.
However, the currency’s upside may be capped by rising US-China trade tensions. Over the weekend, US President Donald Trump announced an additional 10% tariff on Chinese imports starting Tuesday, following a similar hike last month. Additionally, Trump stated on Truth Social that 25% tariffs on Canadian and Mexican goods will take effect on March 4.
Read More – Daily Technical Analysis
AUD/USD TECHNICAL ANALYSIS CHART:
Technical Overview:
AUD/USD is trading within a down channel.
AUD/USD is moving below all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in Selling Zone, while the Stochastic oscillator suggests a Neutral trend.
Immediate Resistance level: 0.6235
Immediate support level: 0.6209
HOW TO TRADE AUD/USD
After an upward trend, AUD/USD faced strong rejection, triggering a sharp reversal to the downside. The pair has broken below its support zone and is currently trading beneath it. At present, it is pulling back toward resistance, and if it faces rejection at higher levels, a further decline could follow.