The AUD/USD currency pair is currently trading right at the psychological level of 0.70 (EMA-100), which is its lowest level since April 13.
This currency pair has weakened by 0.24% since the start of the week and is entirely driven by external factors, due to a lack of domestic economic data and the market holiday earlier this week (King’s Birthday).
Key Points
• China Data
The surge in China's trade surplus and inflation rate has driven up the AUD/USD exchange rate, as China is Australia's main trading partner.
- China Trade Balance (USD) (May), 105.4B (A) vs. 92.1B (F) vs. 84.80B (P)
- China Trade Balance (May), 724B (A) vs. 625B (F) vs. 586B (P)
- China CPI (YoY) (May), 1.2% (A) vs. 1.2% (P)
- China PPI (YoY) (May), 3.9% (A) vs. 2.8% (P)
• RBA Meeting
On May 5, the RBA raised the cash rate by 0.25%, bringing the current cash rate to 4.35%. The Reserve Bank of Australia’s next meeting will be held on June 16, 2026.
Based on the ASX 30-Day Interbank Cash Rate Futures contract for June 2026, market probabilities indicate a 100% chance (as of June 4) that the interest rate will remain unchanged at next week’s meeting.
• Geopolitics
Geopolitical conflicts in the Middle East are the main factor weighing on the AUD/USD exchange rate this week.
Uncertainty regarding whether an agreement will be reached between the U.S. and Iran will be the main obstacle to the Australian dollar’s appreciation
• Fed Rate HIKE Probabilities
The U.S. dollar could limit the Australian dollar’s gains, depending on the outcome of this week’s U.S. inflation report. Will the data reinforce expectations of a rate hike by the Fed?
WHATS NEXT
TA Overview
The AUD/USD currency pair is currently in a downtrend, trading below the EMA50, EMA100, and EMA200 on the H4 chart.
On the daily chart, the currency pair is in a consolidation phase between the 50-day and 100-day EMAs.
The 100-day EMA (Daily) at the 0.7000 level serves as a strong support level for the Aussie. A break below this level opens the door for AUD/USD to move toward 0.6960–0.6940.
Bullish Factors :
• U.S. Inflation Data Slows, U.S. Dollar Weakens
• Geopolitical Tensions Ease
• RBA Interest Rate Projections Shift Toward Hikes
The short-term upside target for AUD/USD is expected to reach the 0.7100–0.7130 range (50-day EMA).
Bearish Factors :
• U.S. Inflation Data Rises, U.S. Dollar Strengthens
• Geopolitical Tensions Escalate
• RBA Interest Rate Projections Shift Toward a Cut
A break below the 0.7000 level could push the AUD/USD currency pair toward April’s lows in the 0.6960–0.6940 range
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