Explore in-depth USD/JPY trade setups and expert forecasts here.
The AUD/USD: US Tariffs and China in Focus
For the Australian dollar, an escalation in the US-China trade war could impact the AUD/USD pair. China recently announced retaliatory tariffs on US goods, threatening counter-tariffs from the US. China’s tariffs take effect on February 10. On February 9, US President Trump announced plans to roll out 25% tariffs on all steel and aluminum imports into the US. He also warned of reciprocal tariffs on selected nations, potentially China.
A full-blown US-China trade war could reduce China’s demand for Aussie goods, weakening Australia’s export-driven economy. Given China accounts for one-third of Aussie exports, the Australian dollar could come under pressure.
In December, RBA Governor Michele Bullock underscored the significance of President Trump’s policies on the Australian economy, stating:
“US moves against China could affect Aussie trade terms with China, potentially impacting the Aussie economy.”
Considering Governor Bullock’s comments, an escalation in the trade war may increase speculation about multiple RBA rate cuts in H1 2025. A more dovish RBA rate path could pull the AUD/USD pair toward $0.62.
For a comprehensive analysis of AUD/USD trends and trade data insights, visit our detailed reports here.
Australian Dollar Daily Chart
Turning to the US session, higher-than-expected consumer inflation expectations may signal a more hawkish Fed rate path. Falling bets on an H1 2025 Fed rate cut could widen the US-Australia interest rate differential in favor of the US dollar. The AUD/USD would likely respond, potentially falling toward the crucial $0.62 support level. A drop below $0.62 may enable the bears to target the upper trend line of the descending channel.
Conversely, a softer inflation reading may ease inflation concerns, driving the pair toward $0.63 and the 50-day EMA. A break above the 50-day EMA may signal a breakout toward the 200-day EMA.
However, traders may hold back on any major moves until after the US CPI Report, Fed Chair Powell’s testimonies, and President Trump’s policy announcements.
