February 04, 2025 at 04:02PM
The AUDUSD plunged yesterday on weekend tariff news, breaking below the January low at 0.61306 to reach its weakest level since early 2020. However, the pair rebounded as Mexico secured a 30-day tariff reprieve, followed by Canada later in the day. This retracement took the price back to the 61.8% level of the decline from the January high at 0.6238.
During today’s European session, the pair dipped into a key support zone between 0.6162 and 0.61779, where buyers stepped in. The price then reclaimed the 100-hour moving average, used it as support, and pushed higher. In the U.S. session, buyers extended gains above the 200-hour MA at 0.6241 and the nearby 61.8% retracement level, signaling bullish intent.
Key Levels to Watch:
Support: The 0.6238–0.6241 zone now acts as immediate support. A break below could shift focus back to the 100-hour MA at 0.62038.
Resistance: Friday’s high near 0.6260 is the next upside target. Beyond that, a swing area between 0.6287 and 0.6301 comes into play, followed by the January high at 0.6331.
Fundamental Risks:
A potential call between President Trump and China’s President Xi remains a wildcard.
Delaying tariffs could support AUDUSD upside.
Reaffirming tariffs as an “opening salvo” could drive renewed selling, with the 100-hour MA as a downside target.
Buyers have taken control for now, but the next move hinges on fundamental developments.
This article was written by Greg Michalowski at www.forexlive.com.
