Australian Dollar faces pressure after US PMI

• Aussie stalls near 0.6400 despite earlier gains.
• Post-PMI sentiment dims risk appetite and benefits the USD.
• RBA's measured stance limits deeper easing bets and might limit the downside.

The AUD/USD pair faces offers pressure near 0.6400 after the release of the United States (US) S&P Global PMI data for February. Although traders deem President Donald Trump's tariff agenda less disruptive than initially feared, the Reserve Bank of Australia's (RBA) cautious interest rate cut stance also curbs the Aussie's attempt to extend its recent upswing.

Daily digest market movers: Aussie deflates as US PMI disappoints

• The US Manufacturing PMI came in at 51.6, surpassing the 51.5 consensus, yet the Services PMI contracted to 49.7, a significant miss versus 53.0 estimates--undermining broader economic optimism.
• The University of Michigan's Consumer Sentiment Index dropped below expectations and the five-year Consumer Inflation Expectation index rose above forecasts, reflecting persistent price concerns.
• The US Dollar Index (DXY) hovered around 106.60, initially boosted by decent manufacturing data but later tempered by disappointing Services figures.
• Tariff jitters persist despite signs that Trump's proposed measures may be less severe, as allies continue negotiations. The market remains wary of potential escalations against key trading partners, including China.
• The Australian Dollar (AUD) weakened modestly, although RBA Governor Michele Bullock's hawkish rhetoric, highlighting the risk of pausing rate cuts, may offer some support.
• The RBA's earlier 25 basis points reduction to 4.10% was framed as a cautious move amid signs of cooling inflation. Analysts anticipate only one more 25 basis points cut in 2025 unless Consumer Price Index (CPI) trends shift notably.

AUD/USD technical outlook: Bulls fail to extend rally, pair hovers below key resistance

The AUD/USD pair retreated after testing the 0.6400 mark, surrendering a portion of earlier gains in light of the US PMI results. The Relative Strength Index (RSI) remains in a higher positive zone but is now declining, suggesting a softening bullish pressure. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram prints flatter green bars, pointing to a slowdown in momentum.

Although the pair remains above its 20-day Simple Moving Average, the failure to break the 100-day Simple Moving Average underscores a possible consolidation phase, leaving traders poised for further tariff or Fed policy developments to set the next directional cue.