The Australian Dollar (AUD) extended its losing streak against the US Dollar (USD) for the third consecutive session on Thursday, despite receiving some support from a subdued Greenback. Ongoing uncertainty over US President Donald Trump’s tariffs and growing recession fears in the US have weighed on market sentiment. However, the AUD/USD pair’s upside remains limited after Trump ruled out exempting Australia from the 25% tariffs on aluminum and steel, key exports valued at nearly $1 billion.
Economic Data and Trade Uncertainty Impact AUD
Australia’s Consumer Inflation Expectations fell to 3.6% in March, down from 4.6% in February, marking a decline from its highest level since April 2024. Meanwhile, Prime Minister Anthony Albanese ruled out retaliatory tariffs against the US, stating that such measures would only drive up costs for Australian consumers and fuel inflation.
Investors remain focused on the Reserve Bank of Australia’s (RBA) policy outlook, particularly after recent economic data showed stronger-than-expected growth, reducing the likelihood of further rate cuts. The RBA’s stance will play a crucial role in determining the AUD’s near-term direction.
Global Trade Tensions Weigh on Sentiment
The US Dollar Index (DXY) held steady around 103.50, supported by easing US inflation data. The Consumer Price Index (CPI) showed that both headline and core inflation cooled faster than expected in February, fueling speculation that the Federal Reserve (Fed) may cut interest rates sooner than anticipated.
Adding to global trade uncertainty, the European Union (EU) imposed retaliatory tariffs on $28 billion worth of US goods after the US levied a 25% tariff on European steel and aluminum. Meanwhile, Bloomberg reported that US-China trade talks remain stalled, with no clear resolution in sight.
China also announced fresh tariffs on Canadian agricultural products in response to earlier Canadian trade measures, further escalating global trade conflicts. RBA Deputy Governor Andrew Hauser warned that uncertainty stemming from Trump’s tariffs has reached a 50-year high, potentially delaying business investment and economic growth.
Technical Analysis: AUD/USD Holds Above Key Support Levels
The AUD/USD pair is trading near 0.6320, maintaining its position above the 50-day Exponential Moving Average (EMA) at 0.6307, signaling continued short-term momentum. The 14-day Relative Strength Index (RSI) remains above 50, suggesting a bullish bias.
On the upside, the pair could test the three-month high of 0.6408, last reached on February 21. However, if it breaks below the 50-day EMA and the nine-day EMA at 0.6304, the short-term momentum could weaken, pushing the pair toward the five-week low of 0.6187, recorded on March 5.
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