Market Overview of AUD/USD
As of March 5, 2025, the Australian Dollar (AUD) has experienced a significant decline, reaching a five-year low of 61.84 US cents in February.
This depreciation is attributed to escalating trade tensions, particularly following the U.S. President’s implementation of new 25% tariffs on imports from Mexico and Canada, alongside increased duties on Chinese goods. Additionally, the Reserve Bank of Australia (RBA) recently reduced the cash rate by a quarter-point to 4.1%, marking the first cut since 2020.
Technical Analysis for AUD/USD Trading in Asian Markets
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Support Levels:
- Initial support is identified at the weekly low of 0.6192 (February 28).
- Subsequent support is at the 2025 bottom of 0.6087, followed by the psychological level of 0.6000.
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Resistance Levels:
- The 2025 peak at 0.6408 (February 21) serves as initial resistance.
- A break above this could target the November 25 high at 0.6549, which aligns closely with the 200-day Simple Moving Average (SMA).
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Momentum Indicators:
- The Relative Strength Index (RSI) is recovering to around 44, indicating potential for a rebound.
- The Average Directional Index (ADX) is above 15, suggesting a strengthening trend.
Intraday Trading Strategy for AUD/USD
Given the prevailing bearish trend, the following intraday trading strategy is proposed:
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Entry Point:
- Consider entering a short position if AUD/USD retraces to the resistance zone between 0.6335 and 0.6362, which has been identified as an initial resistance hurdle.
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Stop-Loss:
- Place a stop-loss order above the resistance at 0.6414 to mitigate potential losses in case of an unexpected bullish reversal.
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Take-Profit:
- Set the initial take-profit target at the support level of 0.6272.
- A secondary target can be placed at 0.6146, considering further downside potential.
Risk Management Strategies for AUD/USD Trading
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Position Sizing:
- Limit exposure to 1-2% of the trading account per trade to manage risk effectively.
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Risk-Reward Ratio:
- Aim for a risk-reward ratio of at least 1:2 to ensure that potential profits outweigh potential losses.
Fundamental Considerations for AUD/USD Trading
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Trade Tensions:
- Ongoing trade disputes, particularly involving the U.S., China, Mexico, and Canada, are likely to continue influencing AUD/USD volatility.
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Monetary Policy:
- The recent RBA rate cut to 4.1% may exert additional downward pressure on the AUD.
Conclusion: AUD/USD Intraday Outlook and Key Takeaways
The AUD/USD pair is currently under bearish pressure due to escalating trade tensions and recent monetary policy adjustments by the RBA. Traders should exercise caution and implement strict risk management strategies when considering intraday positions in this environment.
