AUD – US trade tensions weigh on the Australian dollar

Fears of a US-China trade war intensified, with both countries imposing additional port fees on each other's shipping companies, affecting goods ranging from holiday toys to crude oil. Last Friday, Trump's threat to impose 100% tariffs on Chinese goods sent shockwaves through global stock markets after China expanded controls on rare earth exports. Despite Trump's somewhat softened tone over the weekend, markets remain uneasy, struggling to gauge how the situation will unfold. Separately, Federal Reserve Chairman Powell stated at the National Association for Business Economics (NABE) conference that the US labor market remained weak in September, characterized by "low hiring and low layoffs," but the overall economy "may be more robust than expected."

At its September policy meeting, the Reserve Bank of Australia (RBA) stated that given some stickiness in services inflation and stable employment, it saw no need for an immediate interest rate cut, and future easing actions would be data-dependent. Minutes indicate that the RBA board will focus on third-quarter inflation and consumption data at its November 4th meeting. The RBA board maintained its benchmark interest rate at 3.60% in September, assessing that both upside and downside risks to the economy remain.

Regarding the Australian Dollar (AUD/USD) chart, the 10-day moving average has initially crossed below the 25-day moving average, forming a bearish crossover. The RSI and Stochastics are trading sideways in a high range, suggesting a strong possibility that the Australian dollar is brewing correction pressure. The 0.66 level, a key top in the previous exchange rate trend, remains particularly important. If this level is breached, the Australian dollar is expected to experience a further correction. Based on recent months' gains, the 61.8% correction level is 0.6520. Major support lies at the 200-day moving average, 0.6415, and even 0.6280. The key medium-term target is 0.60. Resistance is expected to return to 0.6550, followed by the 0.6630 level, which has remained unbroken for several days. Major resistance is expected at the 50-month moving average, 0.67 and 0.68.

Forecast range:
Resistance: 0.6550 - 0.6630* - 0.6700 - 0.6800
Support: 0.6520 - 0.6415 - 0.6280 - 0.6000

This Week's News:
October 14th
RBA Minutes: Future Policy Will Remain Cautious and Data-Dependent

Focus:
Thursday
Australian September Employment Data (08:30)

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