AUDUSD Rallies Ahead of NFP Report

Key Fundamental Factors:

1. US Trade Policy:
   • President Trump temporarily exempts automakers in Mexico and Canada from tariffs for one month.
   • He is also considering removing tariffs on certain agricultural products from both countries.
2. Australian Economic Data:
   • Trade surplus rose to 5,620 million in January (higher than expected).
   • Exports increased 1.3%, reaching an 11-month high, while imports fell 0.3%.
   • Building permits surged 6.3%, marking the second month of growth.
   • GDP growth in Q4 2024 was 0.6% (higher than expected).
3. US Economic Factors:
   • The US Dollar (DXY) is at 104.30, struggling due to concerns about slowing growth.
   • US job market slowdown: ADP reported 77K new jobs in February (far below the 140K forecast).
   • Traders await Friday’s Nonfarm Payrolls (NFP) report, showing 160K job gains.
   • US Manufacturing PMI dropped to 50.3 (slightly below expectations).
4. China’s Economic Impact:
   • China’s Services PMI rose to 51.4, signaling steady economic activity.
   • China cleared $530 billion in bad loans and plans to prioritize real estate recovery in 2025.
   • China targets 5% economic growth for 2025 while stabilizing the stock and property markets.
5. Geopolitical Risks:
   • China threatens a strong response to Trump’s tariff hikes, which may affect the Australian dollar due to Australia’s trade reliance on China.
   • RBA Deputy Governor Andrew Hauser warns that global trade uncertainty is at a 50-year high, which could impact business and investment confidence.

Key Takeaway for Traders:

• AUDUSD shows short-term bullish momentum but faces resistance near 0.6380 and 0.6408.
• The US Dollar remains under pressure, but economic data (NFP report) could shift sentiment.
• Keep an eye on China’s trade policies and US tariffs, as they could influence AUD’s strength.

AUDUSD – D1 Timeframe

The price recently broke below the previous lows on the daily timeframe chart of AUDUSD, followed by a quick retracement. The retracement has now reached the supply zone and is expected to come under bearish pressure soon. Let’s take a look at the price action on the lower timeframe, though.

AUDUSD – H4 Timeframe

The price action on the 4-hour timeframe chart of AUDUSD falls perfectly in line with the bearish sentiment already described above. In addition to the supply zone occurring at the 88% Fibonacci retracement level, there is also a confluence from the SBR pattern, as highlighted in the 4-hour timeframe chart attached above.

Analyst’s Expectations: 

Direction: Bearish

Invalidation- 0.64109

Target- 0.62313

CONCLUSION

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