- AUD/USD retreats toward the 0.6280 zone during Monday’s American session after peaking near 0.6340.
- Sentiment on the US Dollar seesaws amid fresh trade headlines and recession commentary.
- Key resistance is noted around 0.6320 and 0.6410; support lies near 0.6290 and 0.6280.
The Australian Dollar (AUD/USD) gave up its earlier strength on Tuesday, falling from session highs near 0.6340 to trade closer to the 0.6280 area during North American hours. The reversal came as the US Dollar Index (DXY) attempted a modest bounce off its three-year low near the 99.00 mark.
This shift in tone followed remarks from US officials suggesting reduced recession risks and progress on trade negotiations with Europe, though concerns remain over the unresolved US-China tariff fight.
Daily digest market movers: USD sentiment fluctuates on mixed economic signals
- Kevin Hassett from the US National Economic Council dismissed fears of a recession, boosting the Greenback’s tone temporarily.
- Sector-specific US tariffs are still likely, especially targeting electronics and chips, despite a general 90-day tariff pause.
- Trade talks with the EU show progress, helping limit broader market fears of a full-scale global tariff escalation.
- The University of Michigan’s Consumer Sentiment Index posted a steep drop, suggesting households are concerned about rising costs.
- Treasury yields remain under pressure, reflecting continued bond demand amid global growth concerns.
- The Australian Dollar remains vulnerable due to its export reliance on China and the escalating trade tensions.
- Investors await key US Retail Sales on Wednesday and Australia’s jobs data on Thursday to provide directional cues.
Technical analysis
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.
Discover more from Latest News Today
Subscribe to get the latest posts sent to your email.
