The Australian Dollar (AUD) is currently trading sideways against the US Dollar (USD) as mixed market sentiment prevails. The AUD/USD pair has been struggling to maintain its upward momentum, with the recent V-shaped recovery stalling just before reaching the December high of 0.6515. Despite hitting a fresh yearly high of 0.6439, the pair remains little changed from the start of the week.
Analysts suggest that AUD/USD may continue to consolidate over the rest of the month, reflecting the flattening slope in the 50-Day Simple Moving Average (SMA) of 0.6299. Economic data from Australia is expected to play a significant role in influencing the AUD/USD exchange rate. The Reserve Bank of Australia (RBA) has committed to relying on incoming data and evolving risk assessments to guide its policy decisions.
In related news, China has exempted some U.S. imports from its 125 percent tariffs, a move seen as an attempt to bolster trade relations. This development has contributed to the mixed market sentiment affecting the Australian Dollar.
Mixed sentiment impacts AUD movement
Michael Hart, President of the American Chamber of Commerce in China, stated, “It is encouraging to see both nations reviewing their tariff policies.”
However, U.S. Treasury Secretary Scott Bessent downplayed the optimism, clarifying that no unilateral tariff cuts had been proposed and that formal negotiations had not yet commenced. Technical analysis of the AUD/USD pair shows it hovering around 0.6410, with bullish indicators suggesting potential upward momentum. Immediate resistance is observed at the recent four-month high of 0.6439, with further resistance at the five-month high of 0.6515.
Support levels are identified at the nine-day EMA at 0.6365 and the 50-day EMA at 0.6302. The pair has recently dipped below its 100-hour and 200-hour moving averages, signaling growing downside pressure. If momentum continues to build, the next downside targets are seen near the 0.6326 to 0.6340 zone.
A sustained move below this zone could prompt sellers to eye the 0.6283 level, which aligns with the 100-day moving average. The future direction of the Australian Dollar will depend on the outcome of US-China trade negotiations and domestic economic policies, especially actions taken by the RBA. Traders are advised to carefully consider their investment objectives and risk tolerance before engaging in forex trading, as it carries a high level of risk.
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