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- AUD/USD trades near range highs within 0.7100–0.7200 consolidation band.
- RSI above 50 supports bullish momentum and potential breakout scenario.
- Break above 0.7250 targets 0.7282 and 0.7300 resistance levels.
AUD/USD holds to minimal gains of 0.10% late in the North American session, yet poised to finish the week up 0.84%. At the time of writing, the pair trades above 0.7200 as the ‘bullish engulfing’ chart pattern caps the Aussie on the downside.
AUD/USD Price Forecast: Technical outlook
From a technical perspective, the AUD/USD trades near the top of a 100-pip consolidation range between 0.7100 and 0.7200, with traders awaiting fresh catalysts. Momentum is bullish as depicted by the Relative Strength Index (RSI) sitting above its neutral level.
On the upside, the first resistance for AUD/USD is the psychological 0.7250 level. If cleared, the next stop would be the June 3, 2022, high of 0.7282 ahead of the 0.7300 area. The next area of interest would be on April 5, 2022, at 0.7661
Conversely, if AUD/USD ends the day below 0.7200, it could open the door for testing the 20-day SMA at 0.7121. Below this level is 0.7100 ─the bottom of the 100-pip range─, followed by the 50-day SMA at 0.7059
AUD/USD Price Chart – Daily
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
- The US Dollar Index (DXY) bounces from two-week lows but stays on track for a weekly decline.
- Markets react to a mix of geopolitical developments and renewed trade tensions.
- DXY holds a bearish bias below key moving averages, with momentum remaining weak.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, turns higher on Friday, recovering from earlier weakness, though it remains on track to close the week in negative territory.
It has been a volatile week for the US Dollar, with price action driven by suspected intervention by Japanese authorities, ongoing Middle East tensions, and renewed trade concerns. At the time of writing, the DXY is trading around 98.21, rebounding from a two-week low of 97.72 reached earlier in the day.
Trade tensions resurfaced after US President Donald Trump threatened to raise tariffs on European automobile imports to as high as 25%, offsetting earlier improvement in risk sentiment following reports that Iran submitted a new proposal through Pakistani mediators aimed at ending the war. While the proposal has raised hopes that talks could resume, tensions remain elevated amid differences over Iran’s nuclear program.
Against this backdrop, along with renewed trade threats, the Greenback is likely to remain supported in the near term, despite a still-weak technical outlook.
Technical Analysis:
On the daily chart, the Dollar Index maintains a bearish near-term tone, trading below key moving averages. The 100-day Simple Moving Average (SMA) at 98.47, the 200-day SMA at 98.56 and the 50-day SMA near 98.98 form a layered resistance zone overhead, keeping upside attempts capped.
Momentum readings are soft rather than capitulatory, with the Relative Strength Index (RSI) hovering in the low-40s and Moving Average Convergence Divergence (MACD) still marginally negative, which suggests downside pressure persists but without a clear oversold signal.
On the downside, initial support is located at the horizontal level near 98.00, where buyers previously emerged to stabilize the decline. On the topside, a recovery would first need to reclaim the 100-day SMA at 98.47, with the 200-day SMA at 98.56 following closely as part of a congested resistance band, while the 50-day SMA near 98.98 represents a higher hurdle that would need to be cleared to ease the prevailing bearish bias.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
- Iran ceasefire talks stalled over the weekend, with the US blockade and the Strait of Hormuz closure both in place.
- US ISM Manufacturing PMI held at 52.7 in April, missing the 53.0 consensus, while the Prices Paid index surged to 84.6.
- Canada's S&P Global Manufacturing PMI jumped to 53.3 in April from 50.0 in March, returning the sector to expansion.
USD/CAD edged higher by less than 0.1% on Friday, recovering from an early-session low near 1.3560 to trade around 1.3590. The pair has shed roughly 0.6% on the week after rolling over from the 1.3700 area mid-week, and momentum has appeared sluggish close to 1.3580 as a cluster of small-bodied candles points to indecision.
The US-Iran conflict and the continued closure of the Strait of Hormuz remain the dominant drivers, keeping crude oil prices elevated and offering tailwinds to the commodity-linked Canadian Dollar. Ceasefire talks stalled over the weekend with both sides hardening their positions, and the US naval blockade of Iranian ports stays in place despite intermittent administration claims of progress that markets have largely discounted.
The US ISM Manufacturing Purchasing Managers Index (PMI) held at 52.7 in April, narrowly missing the 53.0 consensus, while the Employment Index slumped to 46.4 and the Prices Paid component surged to 84.6, the highest reading in over four years. Canada's S&P Global Manufacturing PMI jumped to 53.3 from 50.0 in March, returning the sector to expansion. Markets now look ahead to next Friday's heavy calendar, headlined by US Non-Farm Payrolls (NFP), with consensus pointing to 73K versus 178K previously, and Canadian employment data with the unemployment rate seen unchanged at 6.7%.
USD/CAD 5-minute chart
Technical Analysis
In the five-minute chart, USD/CAD trades at 1.3587, hovering just above the daily open at 1.3580, which now acts as immediate intraday support. The pair has lost upside momentum after earlier gains, while the downward sloping resistance trend line drawn from 1.3680 continues to cap the broader recovery potential. The latest Stochastic RSI reading has retreated toward lower levels, hinting at fading bullish pressure and keeping the near-term tone broadly neutral while price oscillates around the opening level.
On the downside, a clear break back below the 1.3580 daily open would expose softer intraday levels and suggest that sellers are regaining control in the very short term. On the topside, the next meaningful barrier is the descending resistance line coming from 1.3680, and only a sustained move toward that region and a subsequent break higher would start to undermine the broader corrective bias and open the way for a more convincing upside extension.
In the one-hour chart, USD/CAD trades at 1.3589, holding a mildly bearish near-term tone as it remains capped by a downward-sloping trend-line resistance coming in around 1.3680. The lack of nearby moving averages in the dataset keeps the focus on this structural barrier, while the Stochastic RSI has pushed into elevated territory above 70 recently, hinting that upside attempts could face exhaustion below the mentioned trend line.
On the topside, the immediate obstacle is the descending trend-line resistance at 1.3680, and a sustained break above this level would be needed to ease the current bearish pressure and open the way to a stronger recovery. With no clearly defined intraday supports in the provided data, any pullback from current levels would likely see traders looking to prior session lows and intraday swing points below 1.3589 for initial demand, while an inability to challenge 1.3680 would keep the pair vulnerable to further downside probing.
(The technical analysis of this story was written with the help of an AI tool.)
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
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