Daily Price Outlook
During the European trading session, the AUD/USD currency pair struggled to halt its downward momentum, hovering around the 0.6231 level and hitting an intra-day low of 0.6209.
This continued decline could be attributed to heightened risk aversion as market participants closely monitor US President Donald Trump’s economic policies, particularly his stance on tariffs.
Meanwhile, the US Dollar Index (DXY), which tracks the performance of the US dollar against six major currencies, surged to approximately 108.50. Hence, this was seen as as anothr key factor that put pressure on AUD/USD pair.
AUD/USD Pressure Amid Trade Tensions and RBA Rate Cut Expectations
On the AUD front, the AUD/USD pair remains subdued after US President Donald Trump made a remark about potentially placing tariffs on China if a TikTok deal is reached but not approved by China.
This statement came shortly after Trump signed an executive order delaying the TikTok ban by 75 days.
Since Australia has strong trade ties with China, any changes in China’s economy can directly impact Australian markets. This has put pressure on the Australian dollar, causing it to stay under pressure against the US dollar.
The Australian stock market, however, saw some positive movement, with the S&P/ASX 200 Index climbing to nearly 8,400, its highest level in six weeks.
This rally followed Trump’s second-term inauguration, as markets reacted positively to his decision not to impose new tariffs.
Despite this optimism in the equity market, the Australian dollar is struggling, as traders remain cautious about potential economic developments related to trade with China.
Looking ahead, traders are increasingly expecting the Reserve Bank of Australia (RBA) to cut interest rates, possibly as soon as next month.
This expectation is driven by the latest inflation data, which shows core inflation has fallen to its lowest level since the fourth quarter of 2021.
Moving ahead, the investors attention is now turning to Australia’s upcoming quarterly inflation report. This report could offer more clues about the future direction of interest rates and provide further insights into the outlook for the AUD/USD pair.
AUD/USD – Technical Analysis
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