empty
25.04.2025 12:59 AM
The Australian Dollar Could Suffer If the U.S.-China Trade War Escalates

U.S. President Donald Trump once again commented on Federal Reserve Chairman Jerome Powell, openly expressing dissatisfaction with the pace of rate cuts. Another public expression of disapproval of the Fed's policy, accompanied by an accusation against Powell (whom Trump called a "major loser"), triggered a new wave of dollar selling and renewed growth in gold as the primary safe-haven asset.

Market anxiety is beginning to resurface as a result. Although the reaction is less restrained than on Monday, it signals that something is amiss with Trump. The dollar is being forced to respond to this nervousness with another decline.

The NAB quarterly business survey showed a slight improvement in conditions in Q1 but remains below average. Business confidence also improved slightly but remains in negative territory and significantly below the long-term average.

This image is no longer relevant

Several components, such as capital expenditure, declined, indicating that businesses remain cautious.

The Australian dollar faces additional pressure due to the ongoing trade war between the U.S. and China. Despite rumors that the U.S. is ready to exclude some Chinese goods from the new tariffs and Treasury Secretary Bessent suggesting that tensions might ease, China has informed markets that no tariff negotiations are taking place and that if the U.S. truly wants to resolve the issue, it should cancel all unilateral measures. Australia, in turn, is concerned about U.S. pressure to cut back on trade with China, as this would hit Australian exports—something the country would be unable to compensate for elsewhere fully.

Weak recovery momentum, threats to exports, and sluggish consumption growth will continue to pressure the Reserve Bank of Australia, which does little to support bullish sentiment for the AUD. Even outright dollar weakness may only help AUD/USD rise in the short term.

The net short position on the AUD has slightly decreased and stands at -3.73 billion for the reporting week. Positioning remains bearish, but after some initial hesitation, the fair value estimate has risen above the long-term average. This suggests that the current bullish trend may not yet be over.

This image is no longer relevant

As expected, the bullish impulse in AUD/USD—traditionally triggered by turmoil from the Trump administration—was short-lived. After a sharp rally, the pair consolidates near the resistance zone at 0.6410/30. At the same time, dollar weakness prevents the pair from retreating, so the chances for continued growth appear more favorable. A breakout above the local high of 0.6442 and firming above it could lead to further gains toward the next target at 0.6440/50. We consider this scenario more likely. Support lies at the technical level of 0.6317; a drop below this level is unlikely.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

The Yen Has Lost Its Bullish Momentum

The Consumer Price Index (CPI) in the Tokyo region declined in June from 3.4% to 3.1% year-over-year, marking the first signal so far that may indicate a slowdown in price

Kuvat Raharjo 12:21 2025-06-27 UTC+2

EUR/JPY. Analysis and Forecast

The EUR/JPY pair is regaining positive momentum during today's trading session, reversing its recent decline.The euro continues to benefit from the prevailing sentiment of selling the U.S. dollar

Irina Yanina 12:17 2025-06-27 UTC+2

Inflation in Canada Remains Too High – USD/CAD May Accelerate Its Decline

Inflation in Canada remains too high to expect a rate cut by the Bank of Canada at its upcoming meeting. In April, inflation sharply slowed to 1.7% y/y, and most

Kuvat Raharjo 11:16 2025-06-27 UTC+2

XAU/USD. Analysis and Forecast

Gold is drawing renewed selling interest today after breaking below the key $3300 level. Traders are awaiting the release of the U.S. Personal Consumption Expenditures (PCE) Price Index, which

Irina Yanina 10:47 2025-06-27 UTC+2

PCE Index Data Unlikely to Significantly Impact Market Dynamics (Potential for Renewed Growth in EUR/USD and Bitcoin)

The easing of tensions in the markets, following a pause in the military conflict in the Middle East, supports the return of the previous paradigm—an increase in demand for stocks

Pati Gani 09:52 2025-06-27 UTC+2

The Market Is Off the Leash

Greed has returned to the markets. While professionals warn about the need for caution amid geopolitical uncertainty, trade wars, and the state of the U.S. economy, retail investors are once

Marek Petkovich 09:16 2025-06-27 UTC+2

What to Pay Attention to on June 27? A Breakdown of Fundamental Events for Beginners

There are relatively few macroeconomic reports scheduled for Friday. Some experts refer to the PCE indicator as "important" and "the Fed's favorite," but we do not share that view

Paolo Greco 07:02 2025-06-27 UTC+2

GBP/USD Overview – June 27: History Doesn't Repeat Itself

The GBP/USD currency pair continued its strong upward movement throughout Thursday. Since the beginning of the week, the U.S. dollar has lost "only" 330 pips. As we've previously stated

Paolo Greco 03:41 2025-06-27 UTC+2

EUR/USD Overview – June 27: Can Trump Balance the Trade Deficit?

The EUR/USD currency pair is in a "free rise" (similar to the term "free fall"). The dollar is once again plunging into the abyss, just as we repeatedly warned. It's

Paolo Greco 03:41 2025-06-27 UTC+2

Powell, Trump, and Everyone Else

What will change with the arrival of a new Federal Reserve Chair? This is a rather important question, and the answer to it may already have implications for the U.S

Chin Zhao 00:08 2025-06-27 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.