AUD/USD Price Forecast: Trades around 0.7050 after breaking below nine-day EMA
- AUD/USD faces immediate resistance at the nine-day EMA near 0.7071.
- The 14-day Relative Strength Index slips toward mid-50s, indicating weakening upside momentum.
- Initial support stands near 0.6970 at the lower boundary of the ascending channel.
AUD/USD pares its recent gains from the previous session, trading around 0.7050 during the early European hours on Thursday. The technical analysis of the daily chart indicates that the pair is remaining within the ascending channel pattern, indicating that bullish bias prevails.
The near-term bias is mildly bullish as AUD/USD pair holds a clear series of higher closes above the rising 50-day Exponential Moving Average (EMA), while hovering around the nine-day average, indicating a neutral short-term bias.
However, momentum has cooled from overbought readings, with the 14-day Relative Strength Index (RSI) sliding toward the mid-50s, which signals fading upside pressure but not a completed top, keeping the advance in a consolidation phase rather than a reversal.
The AUD/USD pair could find the immediate resistance at the nine-day EMA of 0.7071, followed by the three-year high of 0.7147, reached on February 12. Further advances would support the pair to approach the upper boundary of the ascending channel around 0.7270.
On the downside, the initial support lies at the lower ascending channel boundary around 0.6970, followed by the 50-day EMA at 0.6936. A daily close below the medium-term average would negate the bullish outlook and expose a deeper “Rebound Support” toward the 0.6400 rebound support zone.
(The technical analysis of this story was written with the help of an AI tool.)
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
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