AUD/USD Outlook: Australian Dollar and Chinese Yuan Rally, But Gains May Stall

View related analysis:

The US dollar (USD) was the weakest major currency on Tuesday, as softer US CPI data and positive trade headlines allowed traders to refocus their attention on the Federal Reserve’s (Fed) policy outlook. With US–China tariffs significantly reduced for 90 days, investors now have ample time to anticipate a deal being finalised—easing concerns over both US and global recession risks.

The Chinese yuan also rose to a six-month high on Tuesday after the US and China released a joint statement. This risk-on tone, combined with a weaker US dollar and stronger yuan, helped the Australian dollar flourish—making AUD/USD the strongest major currency on the day.

The Canadian dollar clawed back 0.4% of this week’s earlier losses after USD/CAD met resistance at the 1.40 handle, as investors welcomed some of Prime Minister Carney’s Washington-friendly cabinet picks. GBP/USD rose 1% and formed a bullish engulfing day, EUR/USD pared most of Tuesday’s losses with a 0.85% gain.

Nasdaq 100 and S&P 500 futures extended their post-trade deal gains for a second day, though volatility was reduced and the Dow Jones retraced -0.6% after meeting resistance at the November high. ASX 200 futures rose 0.22% overnight, though it met resistance at the Jan 20 low of 8327.

Australian Dollar (AUD) Technical Outlook

AUD/USD may have been the strongest FX major, but the Australian dollar made the most ground against the Canadian dollar.

AUD/USD formed a strong bullish engulfing candle and closed above both the 200-day simple moving average (SMA) and exponential moving average (EMA), bringing the March high at 0.6515 into focus for bulls today.
AUD/CAD rallied 1.2% and closed just above 0.90, although it encountered resistance at the 200-day SMA around 0.9040.
AUD/EUR climbed to a 28-day high, but potential resistance lies nearby at the March volume point of control (VPOC) and this week’s VPOC, both hovering around the 0.5800 handle.
AUD/CHF closed above 0.54 to mark a 28-day high, as traders continued to rotate out of safe-haven currencies such as the Swiss franc (CHF).
AUD/JPY rose for a second consecutive day, supported by broad yen (JPY) weakness. A break above the March high and 96.00 handle is in focus, though resistance may be found at the 200-day EMA (95.92) and VPOC near 96.50.
AUD/NZD extended its winning streak to five days and reached a 24-day high, although overhead resistance looms at the March 21 low (1.0913) and April 9 high (1.0906).

AUD/USD Technical Analysis: Australian Dollar vs US Dollar

The bullish engulfing candle on AUD/USD is hard to ignore, placing the Aussie less than a day’s trading range from its May high by recent standards. However, a sustained break above 0.6515 will likely require continued strength from Wall Street indices and further appreciation of the Chinese yuan.

While an eventual breakout appears likely, both equity markets and the yuan are showing early signs of exhaustion—leaving AUD/USD vulnerable to a false break above 0.65 before the genuine move unfolds. Also worth noting is the bearish divergence on the daily Relative Strength Index (RSI 2), which may hint at short-term fatigue for bulls.

USD/CNH Technical Analysis: US Dollar vs Chinese Yuan

The Chinese yuan (CNH) reached a six-month high, sending USD/CNH lower for a third straight day. However, the small spinning top doji that formed on Tuesday signals a loss of bearish momentum and marks yet another false break below the monthly S2 pivot at 7.1936. A bullish divergence has also emerged on the daily Relative Strength Index (RSI 2), suggesting a bounce—albeit potentially minor—could be due. This, in turn, may cap further gains for AUD/USD in the near term and could trigger a pullback if the yuan weakens alongside Wall Street indices.

Economic Events in Focus (AEST / GMT+10)

08:45 – New Zealand retail sales (Apr), Migration and Visitors (Apr)
09:50 – Japanese Producer Prices (Apr)
11:30 – Australian wage price index (Q1)
16:00 – German CPI (Apr)
19:00 – Chinese outstanding loan growth, M2 money supply
19:15 – Fed Waller speaks
21:00 – OPEC monthly report
23:10 – Fed Governor Jefferson speaks

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the market you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.