Australian Dollar weakens as impending US tariffs weigh on market sentiment

The Australian Dollar (AUD) trades lower on Monday as global trade uncertainties persist ahead of U.S. President Donald Trump’s planned announcement on reciprocal tariffs set for Wednesday. This ongoing concern continues to weigh on the AUD.

However, encouraging economic data from China may help limit losses. Monday’s data release showed that China’s NBS Manufacturing Purchasing Managers' Index (PMI) edged up to 50.5 in March, compared to 50.2 in February, aligning with market expectations. Additionally, the NBS Non-Manufacturing PMI climbed to 50.8 from 50.4 previously, surpassing the forecasted 50.5.

Looking ahead, market participants are keenly awaiting the Reserve Bank of Australia (RBA) interest rate decision on Tuesday. The RBA is widely expected to keep interest rates steady at 4.1% amid an election campaign focused on cost-of-living concerns and increasing global trade uncertainties. Meanwhile, in the U.S., the ISM Manufacturing PMI for March will be released later on Tuesday, potentially impacting market sentiment.

Australian Dollar Struggles Ahead of RBA Decision

• "The official PMIs suggest that infrastructure spending is ramping up again and that exports have so far remained resilient in the face of U.S. tariffs," said Julian Evans-Pritchard, head of China economics at Capital Economics.
• Economists surveyed by Bloomberg expect the RBA to maintain its policy stance after implementing its first rate cut in four years last month. Meanwhile, China’s finance ministry plans to inject 500 billion yuan ($69 billion) into four major state-owned banks, reinforcing Beijing’s efforts to strengthen its financial sector, per Bloomberg.
• On the U.S. economic front, the Personal Consumption Expenditures (PCE) Price Index increased by 2.5% year-over-year in February, as reported by the U.S. Bureau of Economic Analysis on Friday. This reading met market expectations and matched January’s figure. The core PCE Price Index, which excludes volatile food and energy prices, rose by 2.8% annually in February, exceeding forecasts and January’s revised 2.7% increase. On a monthly basis, the PCE Price Index and core PCE Price Index recorded gains of 0.3% and 0.4%, respectively.
• Additionally, U.S. Personal Income rose by 0.8% in February, while Personal Spending increased by 0.4%. Swaps traders continue to price in two quarter-point rate cuts for this year, with the first expected in July, according to the CME FedWatch tool.
• San Francisco Fed President Mary Daly stated on Friday that she anticipates two rate cuts this year but emphasized that strong economic data allow policymakers to assess how businesses adjust to tariff costs before taking action.

Technical Analysis: AUD/USD Faces Bearish Pressure Within Symmetrical Triangle

AUD/USD trades in negative territory, remaining confined within a symmetrical triangle pattern on the daily chart. The pair maintains a bearish bias, as price action continues below the key 100-day Exponential Moving Average (EMA). However, consolidation remains a possibility, with the 14-day Relative Strength Index (RSI) hovering near the midline, signaling neutral momentum in the near term.

Key support for AUD/USD lies at 0.6262, the low of March 24. A break below this level could intensify selling pressure, pushing the pair towards 0.6225, the lower boundary of the triangle pattern. Further downside risks include 0.6186, the March 4 low.

On the upside, initial resistance appears at 0.6330, the high of March 26. A decisive move above this level could trigger a rally towards 0.6355, aligning with the 100-day EMA. Beyond that, the next key resistance level is 0.6375, the upper limit of the symmetrical triangle pattern.

(This story was corrected on March 31 at 01:49 GMT to reflect that the Australian Dollar climbed following mixed Chinese PMI data, rather than solely positive data.)