AUD/USD extends rally but stalls near 0.7150 as consumer confidence slumps
- Westpac Consumer Confidence plunged 12.5% in April, the sharpest drop since the onset of the Iran conflict.
- US PPI missed expectations by a wide margin, with the services component flat, keeping the Fed's rate path in focus.
- Thursday's Australian employment report and China's Q1 GDP are the next key catalysts for the pair.
AUD/USD extended its bullish push on Tuesday, gaining around 0.38%, but gave back some top-end gains after touching a session high close to 0.7150. Price settled near 0.7120 in a session that saw strong early buying give way to a late pullback, with the intraday chart printing a sharp rejection from the 0.7150 area. The pair has rallied firmly from the early-April lows about 0.6990, but the failure to hold above 0.7150 suggests sellers are defending that level.
On the Australian Dollar side, Westpac Consumer Confidence collapsed 12.5% in April, reflecting growing unease over the global energy shock and its pass-through to domestic costs. Chinese trade data offered a mixed picture: imports surged 27.8% YoY in March, well above the 11.1% consensus, suggesting robust domestic demand, but exports disappointed at 2.5% against an 8.3% forecast. Thursday's Australian employment report (consensus 20K) and China's first-quarter Gross Domestic Product (GDP) reading will be the key test for the Australian Dollar this week.
On the US Dollar side, the Producer Price Index (PPI) printed 0.5% MoM in March, sharply below the 1.2% consensus, while the core reading rose just 0.1%. The miss took some pressure off the Federal Reserve (Fed) rate outlook, though the 4.0% YoY headline, the highest since February 2023, still reflects the energy price shock from the Iran conflict. President Trump's hint that US-Iran peace talks could resume within days added further headwinds for the US Dollar.
AUD/USD 15-minute chart
Technical Analysis
In the fifteen-minute chart, AUD/USD trades at 0.7126, holding modestly above the daily open at 0.7093, which suggests a mildly constructive intraday tone despite the absence of nearby moving average references. The Stochastic RSI at 25.35 is recovering from oversold territory, hinting that recent downside pressure may be fading as price consolidates above the opening pivot.
On the downside, initial support is located at the day’s open around 0.7093, where buyers may attempt to defend the short-term up-bias. With no clearly defined resistance levels from moving averages or Fibonacci retracements in the current dataset, upside progress would likely be driven by momentum normalization, and a sustained break back below 0.7093 would be needed to undermine the nascent positive tone.
In the daily chart, AUD/USD trades at 0.7126. The pair maintains a bullish near-term bias as spot holds well above both the 50-day and 200-day exponential moving averages (EMAs) at 0.6981 and 0.6761, respectively, reinforcing a constructive medium-term structure. However, the Stochastic RSI at 81.10 sits in overbought territory, hinting that while upside momentum is strong, the risk of a corrective pause or consolidation is rising after the latest advance.
On the downside, initial support is seen at the 50-day EMA around 0.6981, where a pullback could attract dip-buying interest in line with the prevailing uptrend, ahead of the more substantial floor at the 200-day EMA near 0.6761. As long as the pair holds above these moving averages, any corrective moves are likely to be viewed as retracements within the broader bullish phase rather than a trend reversal.
(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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