Insights 
VT 
Key Points:
- Australian retail sales rose just 0.3% in March; Q1 volumes stalled.
- AUD/USD climbs 0.4% to $0.6410 amid hopes for U.S.-China trade progress.
The Australian dollar pushed higher on Friday, recovering 0.4% to reach $0.6410, as global risk sentiment improved on hopes of renewed trade talks between the United States and China. This rise came despite weaker-than-expected local consumption data that painted a more fragile picture of Australia’s domestic economy.
Retail sales for March rose only 0.3%, while retail volumes for the first quarter were flat—marking a worrying signal for household demand. The data increases pressure on the Reserve Bank of Australia ahead of its 20 May meeting. Economists at ANZ now see a 25 basis point cut in the RBA’s 4.10% cash rate as a near certainty, citing muted inflation and ongoing global risks.
Markets have priced in 75 basis points of easing by year-end, placing the year-end cash rate around 3.00%. Traders expect the RBA to downgrade its household spending outlook further as inflation remains benign and consumption fails to lift.
Despite the weak retail backdrop, hopes of tentative progress in U.S.-China trade negotiations provided some lift. Risk assets rallied globally, and the Aussie found solid support near $0.6340 after failing to breach the $0.6450 resistance. For now, technical conditions suggest a broad range trade, but the path of least resistance leans downward unless trade developments continue to surprise positively.
Technical Analysis
The AUD/USD pair has shown a bullish rebound, with price climbing from a session low of 0.63692 to test resistance near 0.64130, just shy of the prior high at 0.64272. The moving averages (5,10,30) have aligned in bullish formation, supporting the upward momentum. A break above 0.64272 could clear the path for further upside extension.
Picture: AUD/USD eyes a breakout as bulls return to challenge the 0.6427 ceiling, seen on the VT Markets app
Meanwhile, the MACD (12,26,9) shows increasing green histogram bars and a bullish crossover above the zero line, reinforcing the strength of the current push higher. However, the move is nearing short-term resistance, and momentum may slow unless volume picks up or the pair decisively breaks above 0.64272.
Bias remains bullish in the short term, but the pair is approaching a key test of resistance.
Market Outlook
Looking ahead, Australian political uncertainty may return to the fore as voters head to the polls this weekend. The election is tightly contested, with the potential for a hung parliament. However, analysts expect limited market reaction given both major parties support central bank independence and maintain centrist economic platforms.
With domestic headwinds mounting and external trade dynamics shifting, the Australian dollar may stay range-bound in the near term. A decisive break above $0.6450 or below $0.6340 will likely depend on incoming macro data and clarity from the RBA.
