AUDUSD Under Pressure: Technical Weakness and Economic Challenges Shape 2025 Outlook

The AUDUSD continues to face downward pressure, driven by strong technical signals pointing to sustained bearish momentum. Chart analysis highlights critical patterns and indicators that underscore this trend, while key resistance and support levels provide potential benchmarks for market activity. Against this backdrop, broader economic fundamentals, including Australia’s inflation outlook and cost-of-living pressures, add context to the evolving market dynamics as traders look ahead to 2025.

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The AUDUSD has been sliding steadily lower since September 30, with technical signals painting a clear picture of growing bearish momentum. A Shooting Star candlestick pattern was the first red flag, marking the end of the prior uptrend and setting the stage for a potential reversal.

This bearish shift was reinforced by a “Death Cross” formation, as the 20-period Exponential Moving Average (EMA) slipped below the 50-period EMA, adding fuel to the downward momentum.

Momentum indicators leave little doubt about the strength of this trend. The Momentum Oscillator remains firmly below 100, signaling persistent downside pressure, while the Relative Strength Index (RSI) has dropped below 30, flashing oversold conditions and underscoring intensified selling activity. This convergence of signals suggests the pair may remain under pressure in the near term.

Should the buyers take market control, traders may direct their attention toward the four potential resistance levels below:

0.62749: The initial resistance level is identified at 0.62749, which mirrors the weekly Pivot Point, PP, calculated using the standard methodology.

0.63356: The second price target is seen at 0.63356, representing the daily low marked on December 11.

0.64590: The third price objective is projected at 0.64590, which corresponds with the weekly resistance, R2, estimated using the standard Pivot Points methodology.

0.65484: An additional price target is established at 0.65484, representing the peak from November 25.

Should the sellers maintain market control, traders may consider the four potential support levels listed below:

0.61976: The initial support level is identified at 0.61976, corresponding to the low formed on December 19.

0.61508: The second support level is estimated at 0.61508, representing the 161.8% Fibonacci Extension drawn from the low point, 0.61976, to the high point, 0.62733.

0.60751: The third support level is identified at 0.60751, reflecting the 261.8% Fibonacci Extension drawn from the low point, 0.61976, to the high point, 0.62733.

0.59526: An additional downside target is noted at 0.59526, mirroring the 423.6% Fibonacci Extension drawn from the low point, 0.61976, to the high point, 0.62733.

As Australians continue to grapple with rising costs, the outlook for 2025 offers mixed signals. Inflation has eased significantly, with headline rates dropping to 2.8% in late 2024, thanks to lower energy and fuel prices, according to SBS News. However, underlying inflation remains elevated, driven by poor productivity trends and persistent cost pressures in housing and insurance.

Wage growth is outpacing inflation, providing a slight boost to household budgets, and periodic increases in Centrelink social welfare payments will bring some relief to vulnerable groups. Interest rate cuts could begin as early as May 2025, potentially easing mortgage pressures if inflation remains on a downward trajectory.

The 2025 federal election will likely see cost-of-living measures as a key focus, but as SBS News highlights, limited fiscal flexibility may constrain large-scale relief programs. Both major parties are expected to prioritize incremental initiatives like electricity rebates and childcare subsidies. While modest improvements are on the horizon, substantial relief may take longer to materialize.

The AUDUSD remains under significant bearish pressure, with technical analysis highlighting a sustained downtrend reinforced by key patterns and indicators. As traders navigate potential resistance and support levels, the broader economic context, including inflation trends and cost-of-living challenges, adds depth to market considerations. While some relief may emerge in 2025 through wage growth and targeted policy measures, the path to substantial economic improvement is likely to be gradual, keeping the pair under scrutiny in the near term.