Renewed US-China trade tensions have weighed on the Australian dollar, sparking selling pressure on AUD/USD. With fresh tariffs in place and Beijing’s response adding to market uncertainty, investors remain cautious. Traders now look to key economic data and potential policy moves for further direction.
AUD/USD falls on US-China trade tensions
The AUD/USD pair extended its downward trend on Tuesday, slipping below 0.62 as escalating trade tensions between the US and China dampened risk appetite.
The latest round of US tariffs on Chinese imports came into effect, prompting Beijing to impose retaliatory duties on key US exports, including oil, gas, coal, and agricultural machinery, set to take effect on 10 February.
BREAKING: China's finance ministry announced tariffs on a range of US products in an immediate response to a 10% tariff on Chinese imports announced by US President Donald Trump https://t.co/xx71k28qTh
Given Australia’s strong economic ties with China, the Australian dollar—often viewed as a proxy for the Chinese yuan—faced significant selling pressure.
Traders are bracing for potential disruptions in trade and possible policy interventions from Beijing, keeping AUD/USD under pressure.
Technical analysis
AUD/USD ended the session at 0.61895, marking a 0.58% decline from its opening level of 0.62253 after reaching a session high of 0.62329. Selling pressure erased earlier gains, with the pair settling near intraday lows.
Moving averages (MA 5, 10, 30) suggest a mixed trend. While short-term averages initially indicated upward momentum, the recent decline pushed the price below these levels, signalling potential weakness.
Meanwhile, the longer-term moving average remains above the current price, acting as a resistance barrier.
The MACD (12,26,9) also reflects shifting momentum. Previously suggesting bullish strength, the histogram is now flattening, with the MACD line approaching the signal line—indicating possible consolidation or further downside movement.
Key support is located at 0.6087, the recent low, while resistance stands at 0.62329, the latest high. A break above resistance could trigger renewed buying interest, whereas a move below support may accelerate losses.
Temporary relief for North American trade partners
Meanwhile, President Trump has agreed to postpone tariffs on Mexico and Canada for a month following negotiations with their leaders.
Although this decision has eased short-term trade concerns in North America, broader uncertainty over global trade policy continues to unsettle financial markets.
Focus shifts to the RBA
The next key event for the Australian dollar will be the release of December’s trade data on Thursday, offering insights into the country’s export performance amid global economic uncertainty.
With inflation cooling and economic growth slowing, speculation is mounting that the Reserve Bank of Australia (RBA) may consider an interest rate cut in the coming weeks.
Should the RBA adopt a dovish stance, AUD/USD could remain under pressure, potentially testing lower support levels in the near term.
