Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6300.
- Add a stop-loss at 0.6440.
- Timeline: 1-2 days.
Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6450.
- Add a stop-loss at 0.6300.
The AUD/USD pair wavered after hitting a crucial resistance level as the IMF warned about the United States, China, and Australia. It retreated to a low of 0.6375, down from this week’s high of 0.6440
IMF warning on China, US, and Australia
The AUD/USD pair pulled back after a highly-anticipated repot by the International Monetary Fund (IMF). In it, the agency warned that the three economies will slow because of the ongoing trade war between the US and Australia.
It expects the US economy to grow by 1.8%, down by 0.9% from the previous estimate. Also, it sees the Chinese GDP growing by 3.2% because of the triple-digit tariffs with the United States.
These measures will also hurt Australua, whch sells most of its goods to China. The IMF expects the economy will be $13 billion lower than expected. It sees it growing by 1.6% this year, down from the previous 2.1%.
These warnings mean that the Reserve Bank of Australia (RBA) will deliver more interest rate cuts. Analysts expect the central bank to cut rates to 3.85% in the next meeting in May. it will then end the year at 2.85%.
On the positive side, some members of Trump’s government have warned that the ongoing trade war between the US and China was unsustainable. In a statement Scott Bessent, the Treasury Secretary said that the two countries will eventually reach a deal.
While talks have not started yet, he expects that it will take two to three years to get to a deal.
Looking ahead, S&P Global will publish the flash manufacturing and services PMI data from the United States later today. Also, some Fed officials will talk and provide information on what to expect from the bank.
AUD/USD technical analysis
The AUD/USD pair retreated after peaking at 0.6440 on Monday. Its highest level this week was notable since it was its highest level since December last year. It was also slightly higher than the key resistance at 0.6400, the highest swing in February.
The pair has remained above the 50-day moving average and the 50% Fibonacci Retracement level. It is common for an asset to pull back after hitting a key resistance level as it did this week. It has formed a small bearish engulfing pattern.
The AUD/USD pair will likely retreat and move to the 38.2% retracement level at 0.6300. It will then bounce back and continue the uptrend. A move above the resistance level at 0.6440 will lead to more gains.
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