The Australian Dollar (AUD) is gaining ground on Wednesday, recovering from a more than 0.50% decline against the US Dollar (USD) in the previous session. The AUD/USD pair rose following the release of key economic data from both Australia and China.
The Australian Bureau of Statistics (ABS) reported a stronger-than-expected Consumer Price Index (CPI) increase of 0.9% quarter-over-quarter in Q1 2025, up from 0.2% in Q4 2024 and surpassing the anticipated 0.8% rise. On an annual basis, CPI climbed 2.4%, beating the forecast of 2.2%. Additionally, Australia’s Monthly CPI remained steady with a 2.4% year-over-year increase in March, while the Reserve Bank of Australia’s (RBA) Trimmed Mean CPI also rose by 2.9% year-over-year, in line with expectations.
Meanwhile, in China, the National Bureau of Statistics (NBS) revealed that the Manufacturing Purchasing Managers’ Index (PMI) fell to 49.0 in April, down from 50.5 in March, indicating a return to contraction. The Non-Manufacturing PMI also eased, slipping to 50.4 from 50.8, falling short of the anticipated 50.7.
Despite ongoing global trade uncertainties, which have dampened investor sentiment, inflationary pressures in Australia have tempered expectations for further monetary easing by the RBA. Markets are now largely expecting a 25-basis-point rate cut in May, as the central bank prepares for the potential economic impact of newly imposed US tariffs.
The US Dollar Index (DXY), which tracks the USD against six major currencies, remains above the 99.00 level, with traders awaiting the US Core Personal Consumption Expenditures (PCE) Price Index report for March later on Wednesday. Additionally, data from the US Bureau of Labor Statistics showed a drop in job openings to 7.19 million in March, the lowest since September 2024, indicating softening labor demand amid growing economic uncertainty.
US President Donald Trump has shown willingness to reduce tariffs on China, fueling hopes that the trade conflict between the world’s two largest economies might be nearing an end. However, Beijing has firmly denied any current negotiations with the US on tariffs, maintaining that “dialogue is key to resolving differences.”
On the technical front, the AUD/USD pair is trading around 0.6410, with a bullish outlook indicated by the pair holding above the nine-day Exponential Moving Average (EMA) and the 14-day Relative Strength Index (RSI) remaining well above the 50 level. Immediate resistance is seen at the recent four-month high of 0.6449, and a breakout above this level could open the door to a move toward the five-month high at 0.6515.
Support levels are found at the nine-day EMA at 0.6382 and the 50-day EMA at 0.6314. A break below these levels could weaken the bullish momentum and expose the pair to deeper losses, potentially targeting the March 2020 low around 0.5914.
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