AUD/USD extends slide to fifth straight loss ahead of key data week
- The RBA hiked to 4.10% in March, with markets pricing a 68% chance of another increase in May.
- The Fed held at 3.50% to 3.75%, with Chair Powell noting inflation is not falling as quickly as hoped.
- Friday's Non-Farm Payrolls lands on Good Friday, with consensus at 55K versus a prior print of -92K.
AUD/USD slipped 0.42% on Monday, settling near 0.6850 and extending its losing streak to five consecutive sessions. The pair has now fallen over 300 pips from its year-to-date high close to 0.7190 set in mid-March, with the pace of selling accelerating through late March. Monday's candle printed a wide range between about 0.6870 and 0.6830, closing near the middle of the day's range with little conviction from either side.
The Reserve Bank of Australia (RBA) hiked the cash rate by 25 basis points to 4.10% at its March meeting in a narrow 5-4 split decision, the second consecutive increase. Tuesday's release of the RBA meeting minutes will be closely watched for signals on the Board's appetite for a third straight hike in May. RBA Assistant Governor Christopher Kent warned last week that a prolonged conflict-driven supply shock from the Middle East war could lift both inflation and long-term expectations, potentially requiring a more restrictive policy stance.
On the US Dollar side, the Federal Reserve (Fed) held the federal funds rate at 3.50% to 3.75% at its March meeting, with the updated dot plot still pointing to one cut this year. Chair Powell noted that inflation is not coming down as quickly as hoped, while the implications of the Middle East conflict remain uncertain. This week brings a dense calendar, with the Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) on Wednesday and Non-Farm Payrolls (NFP) on Friday, where consensus sits at 55K after the prior month's negative print. Friday is also Good Friday in both Australia and the US, which will thin liquidity around a potentially volatile release.
AUD/USD 5-minute chart
Technical Analysis
In the 5-minute chart, AUD/USD trades at 0.6846. The near-term bias is mildly bearish as spot holds below the gently declining 200-period exponential moving average near 0.6857, keeping intraday rallies capped under a well-defined dynamic barrier. Price action has been grinding lower in tight ranges, while Stochastic RSI remains subdued in the lower half of its scale despite a modest uptick, indicating weak upside momentum and favoring further downside probes while below the 0.6860 area.
Immediate resistance emerges at the 0.6855–0.6860 band, where recent intraday highs converge with the 200-period EMA, and a break above this zone would be needed to ease current pressure and open 0.6875 next. On the downside, initial support aligns at today’s 0.6844 low, followed by 0.6835, with a decisive move through these levels exposing 0.6825 as the next bearish objective.
In the daily chart, AUD/USD trades at 0.6848. The near-term bias is mildly bearish as price extends below the 50-day exponential moving average, which has started to roll over after flattening near 0.70, signaling fading upside momentum. The pair remains comfortably above the 200-day EMA around 0.67, so the broader trend backdrop stays positive, but the short-term pullback dominates while the Stochastic RSI holds in the lower band, confirming subdued buying pressure.
Initial resistance stands at the 0.6920/0.6950 area, where recent highs converge with the descending 50-day EMA, and a daily close above this zone would be needed to neutralize the current downside bias. Beyond that, 0.7050 is the next resistance to watch ahead of 0.7120. On the downside, immediate support aligns near 0.6800, with a break exposing 0.6750, followed by the 200-day EMA region around 0.6735 as a more significant floor for the prevailing medium-term uptrend.
(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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