The Australian Dollar declines amid market caution ahead of the US Non-Farm Payrolls (NFP) report
FUNDAMENTAL OVERVIEW:
- The Australian Dollar declines as traders turn cautious ahead of Friday’s Nonfarm Payrolls report.
- However, AUD could find support after Trump excluded Mexican and Canadian goods under the USMCA from his proposed 25% tariffs.
- February’s US NFP is projected to rise to 160K, up from January’s weaker 143K reading.
The Australian Dollar (AUD) remains under pressure against the US Dollar (USD) for the second straight day on Friday, extending losses after the release of China’s Trade Balance data. Market participants now turn their attention to the upcoming US Nonfarm Payrolls (NFP) report in the North American session.
China’s trade surplus surged to $170.52 billion in February, surpassing both last year’s $158.44 billion and the expected $142.4 billion, largely due to a drop in imports. While exports rose 2.3% year-over-year, missing the 5% forecast, imports unexpectedly declined by 8.4% against expectations of a 1% increase.
Global trade developments remain in focus as Canada delays the implementation of its second round of retaliatory tariffs on US goods until April 2. This move follows US President Donald Trump’s decision to exempt Mexican and Canadian goods under the USMCA from his proposed 25% tariffs.
The Reserve Bank of Australia (RBA) maintains its forecast for economic growth to slow to around 2% by 2025. While this outlook has previously supported AUD strength, investors remain cautious about potential policy adjustments in response to inflation and labor market trends.
Despite stronger-than-expected Australian GDP data, the Aussie Dollar struggled amid trade policy uncertainties and broader economic concerns. In Q4 2024, Australia’s GDP expanded by 0.6% quarter-over-quarter, exceeding Q3’s 0.3% growth and surpassing market expectations of 0.5%. On an annual basis, GDP rose to 1.3% in Q4, up from 0.8% in the previous quarter.
Meanwhile, geopolitical tensions present a downside risk. A Chinese foreign ministry spokesperson warned late Wednesday that China is prepared for “any type” of war in response to Trump’s escalating trade tariffs, according to the BBC. Given China’s role as Australia’s largest trading partner, these tensions could exert further pressure on the Australian Dollar.
AUD/USD TECHNICAL ANALYSIS CHART:
Technical Overview:
AUD/USD is trading within a up channel.
AUD/USD is moving above 10&50 Moving Averages (SMA).
The Relative Strength Index (RSI) is in Buying Zone, while the Stochastic oscillator suggests a Positive trend.
Immediate Resistance level: 0.6323
Immediate support level: 0.6250
HOW TO TRADE AUD/USD
After declining, AUD/USD found support and reversed upward, breaking through the resistance zone and trading above it. Currently, the pair is pulling back towards the support zone, and if this level holds, AUD/USD may resume its upward trajectory.