The AUD/USD price analysis reveals a subtle bullish tilt as the Aussie stages a comeback, propelled by encouraging economic data from China. Yet, amidst this optimistic backdrop, a shadow looms. The dollar stands firm, fueled by Fed Chair Powell’s hawkish remarks.

Notably, data on Tuesday showed that China’s economy grew more than expected in the first quarter. The economy expanded by 5.3%, compared to estimates of 4.6%. This was a big relief for policymakers trying to support the economy. As a result, the Aussie, a proxy of the Yuan, strengthened. 

Nevertheless, the downtrend for the AUD/USD price remains intact, as fundamentals point to continued strength in the dollar.

The dollar strengthened further on Tuesday as Fed policymakers pushed back rate-cut expectations. Notably, Powell avoided making any comments regarding the timing of rate cuts. Instead, he noted that the US economy needs a restrictive policy for a bit longer. This means higher interest rates for longer. 

Markets are betting that the first Fed rate cut will come in September. Moreover, they expect only 40bps of total rate cuts in 2024. This is a big decline from the 160bps expected when the year began. 

Moreover, geopolitical tensions in the Middle East have raised concerns that high fuel prices might lead to a return of high inflation.

AUD/USD key events today

Markets do not expect any key reports today from Australia or the US. Therefore, investors will keep absorbing policymakers’ remarks.

AUD/USD technical price analysis: Temporary rebound from 0.6400 support

(Click on image to enlarge)

AUD/USD 4-hour chart

On the technical side, the AUD/USD price is on a steep downtrend that has paused at the 0.6400 key support level. Still, the price sits well below the 30-SMA, and the RSI is far under 50, supporting a solid bearish bias.

Bears took over when bullish momentum weakened near the 0.6625 key resistance level. The RSI made a bearish divergence, and the price made a bearish engulfing candle that broke below the 30-SMA. Moreover, the price fell below the 0.6500 key support level. Therefore, the current pause might only retest the 30-SMA before the price falls further.

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