The Australian Dollar (AUD) gained ground against the U.S. Dollar (USD) on Monday, as growing economic concerns in the United States weighed on the greenback. Political tensions and signs of slowing economic momentum in the U.S. are contributing to bearish sentiment, while supportive Chinese data and technical signals provide a tailwind for the Aussie.
U.S. Economic Worries and Trump’s Tariff Threats Pressuring the Dollar
The AUD/USD pair climbed over 0.50% on Monday. The U.S. Dollar came under pressure amid fears of sluggish economic growth and resurging inflation. Market sentiment further deteriorated following former President Donald Trump’s recent threat to double tariffs on steel and aluminum imports—from 25% to 50%—which reignited concerns about trade disruptions.
Meanwhile, U.S. economic data failed to reassure investors. Global manufacturing PMI from S&P dipped from 51.7 to 51.0 in May, marking the lowest reading since February and the second consecutive monthly decline.
Australian Dollar Benefits from China Data and Technical Support
Despite a 1.2% drop in Australia’s ANZ job advertisements for May—following a revised 0.3% decline the previous month—the AUD found support from China’s latest manufacturing data. China’s manufacturing PMI rose from 49.0 in April to 49.5 in May, slightly easing concerns over its industrial slowdown. However, the non-manufacturing PMI slipped from 50.4 to 50.3, below expectations of 50.6.
Technically, the AUD/USD bounced off the 9-day Exponential Moving Average (EMA) near 0.6450 and is currently trading around 0.6460, suggesting renewed bullish momentum. The daily chart shows the pair moving within an ascending channel. The Relative Strength Index (RSI-14) has risen above 50, further signaling short-term upward strength.
Outlook: Key Resistance Ahead at 0.6537
The AUD/USD pair is poised to challenge the initial resistance at 0.6537, which marks the highest level in seven months recorded on May 26. A successful breakout above this level could fuel further upside, potentially targeting the upper boundary of the ascending channel near 0.6650.
On the downside, immediate support lies at the 9-day EMA near 0.6445, aligning with the lower channel boundary at 0.6440. A break below this critical zone could undermine the bullish bias and drive the pair toward the 50-day EMA support at 0.6388.
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