Australian Dollar continues soft on US tariff threats


  • AUD/USD fell 0.80% to 0.6245 on Monday amid heightened risk-off sentiment.
  • The Australian Dollar extended its losing streak for a sixth consecutive session as investors reacted to renewed US tariff measures.
  • US President Trump’s decision to impose import duties on China, one of Australia’s key trading partners, intensified trade war fears.

The Australian Dollar (AUD) extends its losing streak against the US Dollar (USD) on Monday as the pair tests critical support near 0.6250. Amid escalating trade war concerns spurred by US President Donald Trump’s latest tariff policy on Chinese imports, the AUD is under pressure despite some recovery attempts.

Daily digest market movers: Markets assess fresh US tariffs

  • Investor attention shifted sharply after President Trump announced a 25% tariff on Canadian imports and a 10% duty on Chinese goods, actions that have raised inflation concerns and spurred speculation on the Federal Reserve’s potential response.
  • A planned 25% tariff on Mexican imports was temporarily postponed after Mexican authorities agreed to bolster border security by deploying 10,000 troops to the border, a move aimed at reducing drug smuggling.
  • Canada signaled it would take swift retaliatory measures, while China vowed to challenge the tariffs through international trade bodies.
  • January’s ISM Manufacturing PMI exceeded forecasts, signaling continued strength in the US private sector and bolstering the US Dollar's safe-haven appeal despite earlier weakness.

AUD/USD technical outlook: Sellers push to conquer 0.6200 level

The AUD/USD pair has been trading within a tight range lately. On Friday, it managed a modest recovery, rising to 0.6215. The Relative Strength Index (RSI) currently stands at 47, indicating that while momentum is not fully restored, the market remains in a cautious, negative zone. The Moving Average Convergence Divergence (MACD) histogram is showing rising green bars, suggesting that bullish elements are gradually emerging despite overall indecision.

If buyers can push the price above 0.6300, it may signal a more definitive recovery. However, further weakness would lead to additional downside pressure if the support at 0.6200 fails to hold.

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.

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

GBP/USD holds above1.2600 after UK labor market data

GBP/USD holds above1.2600 after UK labor market data

GBP/USD struggles to attract buyers but holds above 1.2600 in the European session on Tuesday. The data from the UK showed that the ILO Unemployment Change remained unchanged at 4.4% in the three months to December, coming in better than the market expectation of 4.5%.

GBP/USD News
EUR/USD holds lower ground near 1.0450, awaits German ZEW survey

EUR/USD holds lower ground near 1.0450, awaits German ZEW survey

EUR/USD holds lower ground near 1.0450 in the European morning on Tuesday. This downside could be attributed to the renewed have demand for the US Dollar amid a risk-off market mood and US rising Treasury bond yields. The focus is on German ZEW and US-Russia talks. 

EUR/USD News
Gold price struggles to capitalize on intraday gains amid modest USD strength

Gold price struggles to capitalize on intraday gains amid modest USD strength

Gold attracts buyers for the second straight day amid concerns about a global trade war. Bets that the Fed would cut rates further lend support to the non-yielding yellow metal. Rebounding US bond yields and a modest USD uptick do little to cap XAU/USD.

Gold News
Storj bulls aiming for double-digit gains

Storj bulls aiming for double-digit gains

Storj, an open-source platform that leverages the blockchain to provide end-to-end encrypted cloud storage services, continues to trade higher by 4.4%, around $0.39 on Tuesday after rallying 5% the previous day.

Read more
Rates down under

Rates down under

Today all Australian eyes were on the Reserve Bank of Australia, and rates were cut as expected. RBA Michele Bullock said higher interest rates had been working as expected, slowing economic activity and curbing inflation, but warned that Tuesday’s first rate cut since 2020 was not the start of a series of reductions.

Read more
The Best Brokers of the Year

The Best Brokers of the Year

SPONSORED Explore top-quality choices worldwide and locally. Compare key features like spreads, leverage, and platforms. Find the right broker for your needs, whether trading CFDs, Forex pairs like EUR/USD, or commodities like Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures

Best Brokers of 2025