On Wednesday (March 5th), before the European market opened, the Australian dollar/US dollar (AUD/USD) exchange rate maintained a sideways fluctuation trend, currently trading around the level of 0.6270. Amid concerns about the slowdown in US economic growth and the impact of tariff policies on the US economy, the US dollar continues to be under pressure, providing some support for the Australian dollar. Market participants are currently waiting for the upcoming release of the US ISM Services PMI and ADP employment data during the North American trading session, which may become key factors affecting the trend of the Australian dollar against the US dollar.

Fundamental analysis

The overall performance of the Australian economic data released today is resilient. Australia's gross domestic product (GDP) for the fourth quarter of 2024 increased by 0.6% month on month, not only surpassing the third quarter's 0.3%, but also exceeding market expectations of 0.5%. From a year-on-year perspective, the GDP growth in the fourth quarter was 1.3%, a significant improvement from the previous quarter's 0.8%.

In addition, the comprehensive purchasing managers' index (PMI) of Yuduo Bank slightly decreased from 51.1 in January to 50.6 in February, marking the fifth consecutive month of business activity growth, although the growth rate has slowed down. The PMI for the service industry also slightly decreased from 51.2 to 50.8, indicating that the service industry has expanded for the thirteenth consecutive month, but the expansion speed has slowed down.

Australian retail sales, as a key indicator of consumer spending, increased by 0.3% month on month in January, rebounding from a 0.1% decline in December. However, the ANZ Roy Morgan Australian Consumer Confidence Index fell from 89.8 the previous week to 87.7, the highest level since May 2022.

However, Andrew Hauser, Deputy Governor of the Reserve Bank of Australia (RBA), warned that global trade uncertainty is at a 50 year high. Hauser specifically pointed out that US President Trump's tariff policies may cause businesses and households to delay planning and investment, thereby having a negative impact on economic growth.

In the United States, the dollar index (DXY) is hovering around 105.70, rising slightly supported by the rising yield of US treasury bond bonds. The yield of two-year and 10-year US treasury bond bonds was 3.98% and 4.25% respectively. The market is betting that Trump may find reasons to retract his tariff threat, putting downward pressure on the US dollar.

The US ISM manufacturing PMI for February was 50.3, slightly lower than the expected 50.5 and also lower than January's 50.9. In contrast, the S&P global final manufacturing PMI exceeded expectations, reaching 52.7, an increase from the initial reading.

Technical analyst interpretation:

The Australian dollar is currently testing the key resistance level of 0.6273-0.6280 against the US dollar. From the daily chart performance, prices are under pressure again after a rebound in mid to late February, showing a clear technical weakness.

The MACD indicator shows DIFF:- 0.0005 DEA:0.0006、MACD:- 0.0021 is located below the zero axis and has formed a dead cross shape, indicating a short-term momentum bias towards the short position. The current reading of the Relative Strength Index (RSI 14) is 47, located in the weak neutral zone, indicating a lack of significant upward momentum in the market.

From the perspective of price structure, the Australian dollar has fallen about 135 points from its February high of 0.6408 against the US dollar and is currently consolidating sideways. It is worth noting that the price rebounded at 0.6186, but the upward momentum was hindered near the 0.6400 level, forming a clear head and shoulder top pattern. If this pattern is confirmed, it will indicate further downside risks.

In terms of support level, the first focus is on 0.6233 (the lowest point of the day). If it falls below this level, it may further test the 0.6186-0.6200 area. If this area cannot be held, it may trigger a deeper adjustment, with the target set at the January low of 0.6087.

In terms of resistance level, the primary short-term resistance level is 0.6279 (the highest point of the day), followed by the 0.6300-0.6320 area. If this area can be effectively broken through, it will open up an upward space leading to 0.6400-0.6408.

The Australian dollar has closed negative against the US dollar for three consecutive weeks, indicating that the medium-term downward trend has not changed. The current price is hovering in the key support level of 0.6250-0.6270, and whether it can stabilize here will determine the future direction.