The Australian Dollar (AUD) is gaining strength, trading near 0.6280 as the US Dollar (USD) continues to decline due to disappointing economic data. Concerns over inflation and trade policies are contributing to the USD’s weakness, leading to a technically bearish trend for the AUD.
The US Dollar Index (DXY) is nearing the 100 mark, registering new three-year lows. Various economic indicators, including the University of Michigan sentiment survey and PPI figures, point towards disinflation concerns, although some policymakers warn about enduring tariff pressures.
Technical Overview Of Aud Usd Pair
The AUD/USD pair has risen for the third consecutive session, with prices oscillating between 0.6180 and 0.6287. Despite the recent gains, the overall technical structure remains unstable, with mixed signals from key indicators such as the Relative Strength Index (RSI) and MACD.
All major moving averages are trending downwards, indicating ongoing bearish pressure. Resistance levels are identified at 0.6244, 0.6261, and 0.6262, while supports are positioned at 0.6236, 0.6215, and 0.6180.
The US-China trade relationship has been marked by economic conflict since early 2018, driven by tariffs imposed by the US in response to claims of unfair practices by China. A Phase One trade deal was signed in January 2020 but has been overshadowed by the COVID-19 pandemic and ongoing tariff enforcement.
Recently, tensions have escalated again, particularly with Donald Trump’s proposal to impose 60% tariffs on China if re-elected. This renewal of the trade conflict is expected to impact global supply chains and consumer price inflation substantially.
Impact Of Us China Trade Tensions
That the Australian Dollar has been climbing while the US Dollar continues its slide suggests markets are repositioning amidst weak Stateside figures. The current price action around 0.6280 largely reflects a combination of external monetary pressures and internal sentiment shifts, even though technicals show ongoing caution.
The US Dollar Index drifting toward the 100 level isn’t something that happens in isolation. The latest data from Michigan’s sentiment survey as well as Producer Price Index releases hint that the Federal Reserve may be closer to achieving its inflation control goals than initially projected, likely contributing to this steady erosion in greenback demand. Still, some policymakers, especially those more hawkish in tone, continue to stress the role of tariffs and unstable import costs—imported inflation, as it were—which complicates the interest rate debate.
Looking at recent price activity, AUD/USD has advanced for the third session running. However, the move hasn’t been met with full confirmation from technical signals. RSI is mid-range, showing neither strong momentum nor exhaustion. The MACD, meanwhile, lacks clarity—suggesting that although recent gains are encouraging, there’s no all-clear yet for a sustained upward leg. Our reading of the chart structure is that while temporary strength exists, the broader setup remains indecisive.
Trend watchers will notice all key moving averages tilting lower. This suggests that in broader timeframes, downside pressure is yet to be shaken off. Resistance remains defined in three narrow bands just above current prices—around 0.6244 to 0.6262—while immediate support is not far below, at 0.6236, 0.6215, and then more materially at 0.6180. There’s limited breathing room either side, which points to potential for sharp reactions to surprises—data-driven or policy-related.
Underneath all this play between currencies lies a larger economic rift, one that began over six years ago. Tariff policies between the United States and China have been reshaping global trade flows since their introduction in 2018. A temporary pause through the Phase One agreement gave hope, but as we know, that was quickly overshadowed by the need to respond to the pandemic, both fiscally and operationally.
Calls by Trump to raise tariffs dramatically if returned to office have re-ignited those tensions. The proposed 60% levy on Chinese goods would not just affect top-line prices for raw materials and imports but will likely ripple across intermediate goods and consumer items, potentially recycling inflation pressures. If implemented, we can anticipate shifts in where production is sourced, and how goods are priced internationally.
In this context, we observe less from sentiment alone and more from options positioning and derivatives flows—how market participants are structuring exposure in this fluid macro backdrop. Reading the moving averages indictates prevailing caution is still embedded. At the same time, three consecutive sessions of gains often bring profit-taking interest, especially when key levels hover so tightly around each other.
As weekly trade flows pick up, keep a close eye on surprises in either tariff rhetoric or inflation readings from the US. These would offer the clearest signals on whether the current bounce continues or unwinds near-term. Monitoring the placement of stops and take-profits near those key resistance and support lines may provide insight into how committed the broader market really is.
