Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6275.
- Add a stop-loss at 0.6000.
- Timeline: 1-3 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6000.
- Add a stop-loss at 0.6275.
The AUD/USD exchange rate rose by over 3% as investors embraced a risk-on sentiment as trade tensions eased. After bottoming at 0.5910 on Wednesday, the pair surged to 0.6175 as the US dollar index pulled back. It remains about 4.20% below its highest point this year.
Risk-on sentiment
The Australian dollar rebounded as market participants a risk-on sentiment after Donald Trump paused his Liberation Day tariffs on over 70 countries. This announcement led to a big drop in the US dollar and a significant increase in stocks.
Analysts believe that Trump will still pause tariffs on Chinese goods, which he hiked to 125% after China retaliated on his tariffs.
The Dow Jones jumped by over 3000 points, while the Nasdaq 100 and S&P 500 jumped by 500 and 2,000, respectively. It was their best day in years. This trend continued in Australia where the ASX 200 soared by over 5%. The VIX index, which is often seen as the fear gauge in Wall Street, tumbled by over 40%.
The AUD/USD jumped as investors anticipated that the Federal Reserve will start cutting interest rates as inflation continues falling and as odds of a stagflation ends. Economists expect the upcoming data to show that the headline consumer price index (CPI) dropped from 2.8% in February to 2.6% in March.
Core inflation, which excludes the volatile food and energy products, is expected to move from 3.1% to 3.0%. Inflation will likely continue falling now that energy prices are falling. Brent and West Texas Intermediate (WTI) have dropped to $65 and $62, respectively.
AUD/USD technical analysis
The AUD/USD pair bottomed at 0.5910 this week and then bounced back to a high of 0.6175. It moved slightly above the key resistance point at 0.6085, its lowest swing on February 3rd. It also formed a bullish engulfing pattern, which is characterized by a large bullish candle that fully engulfs a small bearish candle.
The pair has moved below the 50-day moving average, meaning that bears are still in control for now. Therefore, the pair will likely continue rising as bulls target the Woodie pivot point at 0.6275. A drop below the support at 0.6085 will invalidate the bullish outlook.
Ready to trade our daily Forex signals? Here’s a list of some of the best Forex platforms in Australia to check out