Australian dollar “increasingly immobilised” — Westpac

March 14, 2025 at 02:23AM

Westpac writes today that the AUD/USD is caught between opposing forces: Chaotic US policy increasingly hurting USD growth risks versus global market deleveraging pressures.

From today’s note:

“AUD feels increasingly immobilised, lacking conviction
and stuck between competing narratives. On the plus side there’s a plainly more
constructive medium term AUD outlook developing in real time as US growth risks
build and the USD’s yield underpinnings are challenged by a prolonged period of
policy uncertainty. Tariffs were “supposed” to land more heavily as a
downside growth risk for the RoW, but instead frequent policy reversals,
chaotic delivery and communication are more obviously unsettling the US outlook.”

AUD has shown resilience despite US equity drawdowns

The US policy uncertainty shock sapping US
exceptionalism (this is a view that’s gaining momentum)

Highlight the German debt brake vote as a risk next Tuesday

April 2 ‘reciprocal’ tariffs present strategic flush risk for AUD/USD

Multi-month outlook suggests broad USD weakness despite uneven currency impacts

Here is their technical view:

The base of the channel sits around 0.6220. We can see
AUD threatening the base of this channel and lower levels still – the recent
0.6088 lows, if not 0.6000 – for example if de-risking escalates. But we wonder
if that ultimately proves to be a false break and a long-term buying
opportunity

This article was written by Adam Button at www.forexlive.com.