The Australian dollar closed lower against the U.S. dollar on Wednesday, despite earlier gains. Mixed economic reports from Australia kept the pair’s upward momentum in check.
Australia’s gross domestic product (GDP) grew by 0.2% month-on-month in the first quarter, the Australian Bureau of Statistics (ABS) reported. This was below the 0.6% increase that many had expected. On an annual basis, GDP remained at 1.3%, missing the 1.5% forecast.
The S&P Global Australia Composite Purchasing Managers’ Index (PMI) fell from 51.0 in April to 50.5 in May, marking the eighth straight month of expansion in business activity. However, this reading was the slowest pace so far in 2025.
In May, the S&P Global Australia Services PMI stood at 50.6, its 16th month above the 50-point mark. Still, the services sector’s growth rate was the weakest it has been in six months. The Australian Manufacturing PMI improved to 23.5, up from 26.5, but it remained firmly in contraction territory. Manufacturers cited project delays and rising uncertainty in both the global and domestic markets.
RBA Official Warns of Global Headwinds
Sarah Hunter, assistant governor of the Reserve Bank of Australia (RBA), spoke on Tuesday about the impact of higher U.S. tariffs. She said that these tariffs will drag on the global economy. Hunter warned that growing uncertainty could dampen investment, output, and employment in Australia.
Despite the warning, she noted that Australian exporters are better positioned to weather the storm. She also said she expects China to support its economy with fiscal stimulus measures.
Technical Outlook: AUD/USD Remains in Rising Channel
On Wednesday, AUD/USD traded near 0.6470, signaling a generally bullish trend. Technical analysis shows that the pair is still moving within an ascending channel on the daily chart. Short-term momentum remains strong, as the pair stays above its 9-day exponential moving average (EMA).
The 14-day relative strength index (RSI) is above 50, which also points to a continuing bullish outlook. On the upside, the next target is the seven-month high of 0.6537, reached on May 26. If AUD/USD breaks above that level, it could climb toward the upper boundary of the rising channel around 0.6670.
On the downside, immediate support sits at the 9-day EMA, currently near 0.6456. This level aligns closely with the lower boundary of the ascending channel, around 0.6450. If AUD/USD falls below this key support, it may test the 50-day moving average at 0.6395.
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