The Aussie’s Tuesday slide had little to do with anything domestic. Westpac Consumer Confidence printed a +3.5% rebound for May, a swing that should normally count as a meaningful signal after April’s -12.5% slump, and the Reserve Bank of Australia’s (RBA) latest Meeting Minutes did little to disturb pricing for the next move. Yet AUD/USD still drifted through the 50-day exponential moving average (EMA) on the daily chart, the line that has cushioned every dip since April’s reversal, with sellers leaning into broader US Dollar firmness rather than fading the Aussie itself.
That distinction matters. The week’s heavy lifting on the Aussie side starts Wednesday with the People’s Bank of China (PBoC) rate decision, where consensus is for the one-year Loan Prime Rate to be left at 3% for another month. A pass-through hold barely registers, but any hint of further easing would put fresh strain on the CNH leg of the cross and drag AUD/USD lower regardless of what the RBA minutes implied. Worth noting that the local PMI batch lands the same session, with the prior reads sitting just above the expansion line on all three measures.
Domestic catalysts coming into view
Thursday brings the heavyweight: Australian employment data alongside the May Consumer Inflation Expectations print. The market is looking for Employment Change near 17.5K with the Unemployment Rate steady at 4.3%, in line with the prior month. Even a modest miss would let the doves in the RBA debate argue that the next move is more clearly down, and that is the read the rates strip seems to want.
Why the technical break matters
The 50-day EMA had been holding AUD/USD inside a clean uptrend since April’s low near 0.69. Tuesday’s daily close on the wrong side of that line, with the move briefly testing below 0.71 intraday, leaves the chart open to a deeper drift toward the 0.70 handle. There is very little structural support between current levels and that round figure on the daily, and momentum has flipped. The 200-day EMA, which has been an irrelevance for most of the year, suddenly looks like a level worth circling for the medium-term picture.
Setup into Thursday’s jobs print
For the rest of the week the setup is fairly mechanical. A reclaim of the 50-day EMA on a daily close would mean Tuesday’s break is a fade and the broader uptrend remains intact. A second daily close below it, particularly if jobs data confirms the loosening picture, opens up the 0.70 handle as the next target. Anything in between, and AUD/USD probably wastes time chopping near current levels while traders wait for the Federal Open Market Committee (FOMC) Minutes on Wednesday and the US flash PMIs on Thursday to do the work the RBA minutes refused to.
The risk for bulls is that Tuesday’s break was the easy part. Two cracks in one tape, on a day when the only domestic data point was outright positive for the Aussie, does not read like a market that wants to be long here.
AUD/USD 5-minute chart
Technical Analysis
In the five-minute chart, AUD/USD trades at 0.7108. The pair remains under clear intraday pressure, holding well below the day’s open at 0.7171, which keeps the near-term bias bearish despite a mild intraday stabilization. The Stochastic RSI has turned higher from deeply oversold territory, hinting at scope for a corrective bounce, but this momentum improvement has yet to challenge the prevailing downside structure.
On the topside, initial resistance is located at the day’s open level near 0.7171, where sellers are likely to defend the short-term downtrend. A sustained break above this hurdle would be needed to ease immediate bearish pressure and open the way for a more meaningful recovery; until then, rallies are likely to be viewed as corrective within a broader intraday decline.
In the daily chart, AUD/USD trades at 0.7108, hovering just under the 50-day exponential moving average (EMA) at 0.7111 while holding well above the 200-day EMA at 0.6856, which keeps the broader backdrop constructive but caps immediate upside. The Stochastic RSI around 52 suggests only modest bullish momentum, hinting that bulls lack the conviction to force a clear break above the near-term average for now.
On the topside, initial resistance is located at the 50-day EMA around 0.7111, and a sustained move above this barrier would be needed to reopen a more decisive advance. On the downside, the 200-day EMA at 0.6856 remains a key structural support level, and as long as price holds well above this longer-term floor, pullbacks are likely to be treated as corrective within a medium-term upward bias.
(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.
