Australian Dollar finds support as traders expect RBA to keep rates unchanged in April

• The Australian Dollar strengthens amid rising expectations of the Reserve Bank of Australia keeping interest rates unchanged in April.
• The AUD could encounter headwinds as traders adopt a cautious stance ahead of Trump's anticipated tariff announcement on April 2.
• The US Dollar gained ground as S&P Global US Services PMI surged to 54.3 in March, a three-month high.

The Australian Dollar (AUD) extends its gains for the second successive session on Tuesday. However, the AUD/USD pair faced downward pressure amid a strengthening US Dollar (USD). Robust S&P Services PMI data and cautious Fedspeak likely fueled the Greenback's gains.

The AUD finds support as investors anticipate the Reserve Bank of Australia (RBA) keeping interest rates unchanged in April, following its first rate cut in four years in February. Additionally, expectations of Chinese stimulus continue to bolster the Australian economy, given the strong trade ties between the two nations.

Still, the risk-sensitive AUD/USD pair could face potential headwinds as traders remain cautious amid uncertainty over US President Donald Trump's tariff announcement scheduled for April 2. While Trump hinted that "a lot" of countries could receive exemptions, the details of his administration's tariff plans remain unclear.

Australian Dollar appreciates despite a stable US Dollar

• The US Dollar Index (DXY), which tracks the USD against six major currencies, remains stable and is trading around near 104.30. The Greenback received support after the release of mixed S&P Global US PMI data on Monday.
• The S&P Global US Composite PMI climbed to 53.5 in March, up from February's 10-month low of 51.6, signaling the strongest growth since December 2024. The expansion was driven by the service sector, which saw a rebound in business activity.
• The S&P Global US Services PMI surged to 54.3 in March, a three-month high, from 51.0 in February, exceeding market expectations of 50.8. Service sector output rebounded sharply after hitting a 15-month low in February. Meanwhile, the Manufacturing PMI dropped to 49.8 from 52.7, falling short of market expectations of 51.8. This decline followed February's strongest manufacturing output increase in nearly three years.
• Atlanta Fed President Raphael Bostic emphasized ongoing uncertainty, stating that inflation progress may be slower than previously projected. Bostic trimmed his 2025 rate cut expectations, citing persistent price pressure and trade-related risks.
• The US Dollar came under pressure as concerns grow over a potential US economic slowdown, fueled by trade policies under President Trump. However, this downward trend was offset by hawkish remarks from Fed Chair Jerome Powell last week. He stated, "Labor market conditions are solid, and inflation has moved closer to our 2% longer-run goal, though it remains somewhat elevated."
• President Trump suggested there could be room for "talk" on trade issues with China and expressed hope for a meeting with Chinese President Xi Jinping in the near future. Earlier this month, his proposal to strengthen US shipbuilding by imposing steep fees on China-linked vessels entering American ports led to a buildup of US coal inventories and heightened uncertainty in the already struggling agriculture sector.
• Judo Bank and S&P Global reported on Monday that Australia's Manufacturing PMI climbed to 52.6 in March from 50.4 in February, while the Services PMI improved to 51.2 from 50.8. The Composite PMI also increased, reaching 51.3 in March compared to 50.6 previously.
• China's ruling Communist Party (CCP) central committee and State Council have suggested ambitious plans to "vigorously boost consumption" by raising wages and easing financial burdens. This latest initiative aims to restore consumer confidence and revitalize the country's struggling economy.
• Reserve Bank of Australia (RBA) Assistant Governor (Economic) Sarah Hunter reiterated last week the central bank's cautious stance on rate cuts. The RBA's February statement signaled a more conservative approach than market expectations, with a strong focus on monitoring US policy decisions and their potential impact on Australia's inflation outlook.

Australian Dollar remains below 0.6300 resistance near nine-day EMA

AUD/USD is trading near 0.6290 on Tuesday, with technical indicators signaling a bearish bias as the pair remains within a descending channel. The 14-day Relative Strength Index (RSI) sits just below 50, reinforcing the persistent downward momentum.

Key support lies at the lower boundary of the descending channel around 0.6220. A break below this level could deepen the bearish outlook, potentially driving the pair toward its seven-week low of 0.6187, recorded on March 5.

On the upside, initial resistance is at the nine-day Exponential Moving Average (EMA) of 0.6308, closely followed by the 50-day EMA at 0.6310. A breakout above these levels could strengthen short- and medium-term bullish momentum, with the pair potentially testing the upper boundary of the descending channel at 0.6320.

AUD/USD: Daily Chart