The Australian Dollar (AUD) is maintaining slight gains against the US Dollar (USD) on Thursday, despite weaker-than-expected Private Capital Expenditure (Capex) data for Q4 2024. The AUD/USD pair edged higher, even as the data showed a surprising 0.2% contraction in Capex, missing the anticipated 0.8% growth, following a revised 1.6% expansion in the previous quarter.
Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser remarked Thursday that while he expects to see positive developments on inflation, there is a need to witness concrete progress first. He highlighted that the persistent tightness in Australia’s labor market remains a significant hurdle in controlling inflationary pressures.
On Wednesday, the Australian Dollar came under pressure after Australia’s Consumer Price Index (CPI) for January rose 2.5% year-over-year, matching December’s increase but falling short of the market’s expected 2.6% rise.
In addition, global risk sentiment remains a challenge for the AUD. US President Donald Trump’s announcement this week regarding the continuation of tariffs on imports from Canada and Mexico, set to take effect after a month-long delay, contributed to market jitters. Moreover, new plans to tighten export controls on semiconductor chips to China—one of Australia’s key trading partners—further strained sentiment.
US Dollar Strengthens as Traders React to Economic and Trade Developments
The US Dollar Index (DXY), which measures the USD against a basket of six major currencies, has been advancing, reaching near 106.50 as traders analyze the state of the economy and ongoing tariff disputes. Federal Reserve Bank of Atlanta President Raphael Bostic stated late Wednesday that the Fed should hold interest rates at current levels, which would continue to exert downward pressure on inflation.
Furthermore, US Commerce Secretary Howard Lutnick emphasized that reciprocal tariffs are expected to begin on April 3, while Treasury Secretary Scott Bessent expressed his commitment to making President Trump’s tax cuts permanent. These developments have supported the USD, especially as the White House continues to push forward with aggressive trade policies and economic measures.
Increased Risk Aversion Could Weigh on the Australian Dollar
The Australian Dollar faces additional challenges due to increased global risk aversion. The Reserve Bank of Australia (RBA) recently lowered the Official Cash Rate (OCR) by 25 basis points to 4.10%, marking the first rate cut in four years. While RBA Governor Michele Bullock acknowledged the impact of high interest rates, she cautioned that it was too soon to declare victory over inflation, adding to the uncertainty around the outlook for the AUD.
AUD/USD Faces Bearish Bias, Testing Key Support Levels
The AUD/USD pair is hovering around the 0.6300 level on Thursday. Technical analysis of the daily chart reveals a weakening short-term momentum, as the pair remains below both the nine- and 14-day Exponential Moving Averages (EMAs). The 14-day Relative Strength Index (RSI) remains below 50, reinforcing a bearish outlook for the currency pair.
Immediate support is seen at the psychological level of 0.6300. A break below this support could push the pair towards the 0.6087 region, marking the lowest point since April 2020, recorded on February 3.
On the upside, resistance is found at the 14-day EMA of 0.6323, followed by the nine-day EMA at 0.6329. A decisive move above these levels could bolster short-term momentum, paving the way for the pair to challenge the two-month high of 0.6408, reached on February 21.
Related topics:
Venture Global Receives Approval to Increase LNG Export Capacity at Plaquemines Plant
Trump Proposes DOGE Savings for Citizens, Defends Cost-Cutting Measures Amid Criticism
