Australian Dollar rebounds toward 0.6150 as US Dollar fades post-Fed minutes, tariff pivot
- AUD/USD rallies toward the 0.6150 zone in Wednesday’s US session, buoyed by risk-on flows and broad Greenback weakness.
- Trump’s surprise 90-day pause on key tariffs lifts sentiment, but Fed officials warn about long-term inflation risks.
- Despite the bounce, AUD/USD retains a bearish technical tone with key moving averages and oscillators flashing mixed signals.
The Australian Dollar (AUD) strengthened during Wednesday’s American session, climbing toward the mid-0.6100s as the US Dollar (USD) continued to retreat amid a risk-on rally in global markets. The pair rebounded sharply after US President Donald Trump abruptly paused most tariffs for 90 days, sparking a surge in equities and helping risk-sensitive currencies.
The Federal Reserve's (Fed) March meeting minutes, released during the session, revealed that policymakers are grappling with “difficult tradeoffs” due to persistent inflation pressures and a weakening growth outlook. From a technical standpoint, AUD/USD remains biased to the downside despite Wednesday's bounce, as momentum indicators and moving averages continue to favor sellers.
Daily digest market movers: US Dollar clings to recovery after Fed signals caution
- The US Dollar Index (DXY) held near the 103.00 area on Wednesday after recent heavy losses, finding some stability following the release of the Federal Reserve’s March meeting minutes. The minutes acknowledged an economic crossroads, highlighting that inflation risks may endure even as growth softens.
- President Trump’s unexpected move to pause most “reciprocal” and 10% tariffs for 90 days boosted market sentiment, lifting the Dow Jones above the 40,000 level in a historic surge. Despite this, tariffs on China remain intact and were raised to 125% in response to Beijing’s 84% countermeasure.
- Fed officials struck a cautious tone, noting that uncertainty surrounding trade and inflation dynamics limits their ability to move swiftly on interest rates. Richmond Fed’s Barkin and St. Louis Fed’s Musalem emphasized that tariffs complicate the policy landscape and could delay future rate adjustments.
- Risk appetite returned broadly as global investors welcomed the temporary tariff relief. However, markets remain wary of lingering trade tensions, especially given China’s exclusion from the pause.
- AUD benefited from the softer USD backdrop, but its upside may be capped as trade disruptions weigh heavily on Australia’s China-dependent export economy and support RBA dovish expectations.
Technical analysis
AUD/USD surged toward the top half of its intraday range but remains below major technical hurdles, with its broader trend still skewed to the downside. While price action turned higher, technical indicators paint a mixed picture.
The Moving Average Convergence Divergence (MACD) continues to print red bars, reinforcing a bearish trend despite today’s rally. The Relative Strength Index (RSI) hovers just below 50, reflecting a flat yet slightly negative tone. Interestingly, the Commodity Channel Index (CCI) shows a buy signal, while the Stochastic oscillator sits in neutral territory, highlighting a lack of any strong conviction.
Moving averages remain clearly bearish. The 20-day, 100-day, and 200-day Simple Moving Averages all slope downward, offering resistance ahead. The 10-day Exponential Moving Average and 10-day SMA — around the 0.6130–0.6170 area — also suggest headwinds for bulls.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
Author
Patricio Martín
FXStreet
Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.
