The AUD/USD exchange rate has shown remarkable resilience, holding firm despite mixed macroeconomic signals from China, Australia, and the United States. A bullish engulfing candlestick pattern on the daily chart is reinforcing the view that the Australian dollar could extend its recent rally against the US dollar, with traders increasingly focused on upcoming economic catalysts and key technical resistance levels.
The brokers at PrimeLuno provide a comprehensive breakdown of this topic in this article.
Key Market Overview
The AUD/USD pair traded steadily at the start of the week, rising to an intraday high of 0.6715, and remains within striking distance of its year-to-date high of 0.6786. Since bottoming in November last year, the pair has rallied by approximately 4.55%, reflecting a combination of improving risk sentiment, commodity-linked demand, and technical strength.
The formation of a bullish engulfing pattern following China’s latest macroeconomic data release has added further confidence to the bullish outlook, suggesting that buyers are firmly in control of the trend.
China’s Economic Data and Its Impact on AUD/USD
China, Australia’s largest trading partner, published its latest economic figures on Monday, which showed a moderation in growth momentum. According to the report, the Chinese economy expanded by 4.5% in the fourth quarter, down from 4.8% in the third quarter, reflecting continued weakness in investment spending and the housing sector.
Despite this quarterly slowdown, China still managed to meet its annual growth target of 5%, largely supported by a surging trade surplus. The country’s trade surplus reportedly jumped to over $1.5 trillion last year, underscoring the strength of its export sector.
Australia Jobs Data: A Major Near-Term Catalyst
The next major driver for the AUD/USD exchange rate will be the Australian employment report, scheduled for release on Thursday. Economists surveyed by Reuters expect the data to show that Australia lost 30,000 jobs in January, following a 21,300 job decline in the previous month.
In addition, forecasts suggest that the unemployment rate could edge higher to 4.4%, up from 4.3%, while the participation rate is expected to rise to 66.8%. These labor market indicators are closely monitored by the Reserve Bank of Australia (RBA) and play a crucial role in shaping monetary policy expectations.
Although job losses may weigh on sentiment in the short term, a stable participation rate could signal underlying labor market resilience, limiting downside risks for the Australian dollar.
RBA Interest Rate Outlook
Market consensus currently suggests that the RBA will leave interest rates unchanged at 3.6% during its upcoming policy meeting on February 3rd. This expectation is driven by persistently elevated inflation, which continues to limit the central bank’s ability to pivot toward monetary easing.
A prolonged period of steady interest rates could support the AUD by maintaining a relatively attractive yield differential, especially if expectations of US Federal Reserve rate cuts continue to build later this year.
SCOTUS Ruling on the US’s Tariffs: A Wildcard Risk
Another factor influencing the AUD/USD pair is the anticipated Supreme Court (SCOTUS) ruling on the US’s tariffs, expected later on Tuesday. Any decision that alters the outlook for global trade policy could significantly impact risk-sensitive currencies like the Australian dollar.
A ruling that revives or expands tariffs may strengthen the US dollar as a safe-haven asset, while a more trade-friendly outcome could boost commodity-linked currencies, including the AUD.
AUD/USD Technical Analysis
From a technical perspective, the daily chart paints a constructive bullish picture. The AUD/USD pair remains firmly above the 50-day Exponential Moving Average (EMA) and the Supertrend indicator, both of which are signaling continued upside momentum.
Price action is contained within a well-defined ascending channel, a classic indication that the broader uptrend remains intact. Most notably, the recent bullish engulfing candlestick pattern, where a strong bullish candle completely covers the prior bearish candle, suggests a potential continuation of gains rather than a temporary bounce.
Outlook and Price Targets
Given the current setup, the AUD/USD pair is likely to continue rising, with bulls targeting the next key resistance level at 0.6765, which marks the highest level reached this year. A decisive break above this zone would open the door for further upside toward the psychological resistance at 0.6800.
As long as the pair remains above key moving averages and within the ascending channel, the bullish bias is expected to persist, barring any major negative surprises from economic data or geopolitical developments.
Bottom Line
The combination of bullish technical signals, China’s stable trade performance, and steady RBA policy expectations suggests that the AUD/USD forex signal remains biased to the upside. While upcoming events such as Australia’s jobs data and the SCOTUS tariff ruling may inject volatility, the broader trend continues to favor additional gains in the near term.
