Australian dollar analysis: AUD/USD drops sharply as US data slows
Australian dollar and AUD/USD takeaways
- Today’s US data showed that the long-awaited slowdown in the US economy may finally be at hand, an ominous sign for risk assets like the Australian dollar.
- AUD/USD has reversed aggressively off the top of its multi-month range at 0.6800.
- The contained price action provides short-term opportunities for readers who prefer trading ranges.
AUD/USD fundamental analysis
This morning’s US data showed that the long-awaited slowing of the US economy may finally be at hand. Producer prices fell from 2.7% y/y last month down to 2.3%, a reading that also came in below the 2.4% print that economists were expecting. At the same time, the US initial unemployment claims report showed an unexpected surge to 264K (vs. 245K) expected; while this reading is still relatively low historically, it has been consistently rising since the start of April, signaling that the labor market may finally be loosening.
Source: Tradingview, StoneX
As is often the case with the world’s largest economy, US economic weakness is actually leading to strength in the US dollar today. Traders often say that “If the US sneezes, the world catches a cold,” and at the end of the day, any weakness in the US economy is likely to spread to other regions, stoking demand for the world’s reserve currency. In particular, risk-appetite-sensitive assets, including commodity currencies like the Canadian and Australian dollars, are seeing strong selling pressure.
Australian Dollar technical analysis– AUD/USD Daily Chart
Source: Tradingview, StoneX
As the AUD/USD chart above shows, the Australian dollar is rolling over strongly today after testing its range high near 0.6800. The cross-Pacific cross has been trapped within a roughly 200-pip range between 0.6800 and 0.6575 going back to late February, and with today’s big bearish move (the biggest percentage decline since early March if it holds), that range looks likely to hold for a bit longer.
Moving forward, there’s little in the way of strong, clear support until back at the bottom of the range near 0.6600. The contained price action provides short-term opportunities for readers who prefer trading ranges, while longer-term swing and position traders may want to wait for a confirmed breakout to signal the direction of the next major trend.
-- Written by Matt Weller, Global Head of Research
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Contracts for Difference (CFDs) are not available to US residents.
FOREX.com is a trading name of GAIN Capital - FOREX.com Canada Limited, 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA is a member of the Canadian Investment Regulatory Organization and Member of the Canadian Investor Protection Fund. GAIN Capital – FOREX.com Canada Limited is a wholly-owned subsidiary of Stonex Group Inc.
Complaints are taken very seriously at FOREX.com. You can view our complaints procedure here.
© FOREX.COM 2025