The Australian Dollar (AUD) declined against the US Dollar (USD) on Monday, decreasing by 0.40%. This downturn was driven by weak market sentiment influenced by US economic concerns and disappointing inflation data from China.
President Trump’s comments regarding a “transition period” for the US economy raised uncertainty. Additionally, China’s Consumer Price Index (CPI) fell by 0.7% year-on-year, exceeding forecasts, further creating worries about demand for Australian exports.
Impact Of Trade Tensions
Trade tensions, including tariffs on Canadian, Mexican, and Chinese products, intensified market worries. Meanwhile, copper prices and iron ore continued to slide, affecting AUD sustainability.
Technical indicators demonstrate bearish momentum for AUD/USD, with the pair trading below the 20-day Simple Moving Average (SMA). Key support is seen near the 0.6200 mark, while resistance remains at 0.6320.
Market participants are awaiting important US economic data, including February’s CPI, which could impact Federal Reserve policies and influence AUD/USD movements. The health of the Chinese economy and the price of iron ore remain pivotal factors for the Australian Dollar’s performance.
Monday saw the Australian Dollar lose 0.40% against the US Dollar as weak sentiment took hold. Worries about the strength of the US economy combined with underwhelming inflation figures from China weighed on the currency.
Trump’s mention of a “transition period” for the US economy introduced more doubt into the markets. Investors do not respond well to uncertainty, and this statement raised concerns about future economic stability. Meanwhile, China’s inflation report showed a Consumer Price Index drop of 0.7% year-on-year, a steeper decline than expected. Given Australia’s strong trade link to China, especially in commodities, any signs of lower demand from Beijing tend to drag down the Australian Dollar.
The mood was further unsettled by ongoing trade disputes, which remain a source of instability. Tariffs imposed on goods from Canada, Mexico, and China add to concerns about global trade conditions. Given Australia’s export-driven economy, any disruptions in world trade patterns filter into its currency.
Commodity prices also played a role, with falling copper and iron ore prices weakening the AUD’s position. These materials are central to Australia’s export market, and their softness suggests slowing demand, particularly from China. The Australian Dollar typically follows fluctuations in these commodities, and at the moment, the direction is clear.
Technical Outlook For Audusd
From a technical perspective, signs do not look favourable. The AUD/USD pair remains below its 20-day Simple Moving Average, indicating downward pressure. Support sits around 0.6200, meaning a break below this level could trigger heavier selling. On the upside, resistance at 0.6320 suggests limited room for a rapid recovery unless sentiment shifts convincingly.
Eyes are now on upcoming US inflation data, which could steer Federal Reserve decision-making. Should February’s CPI come in higher than forecast, speculation about additional Fed rate hikes may rise, widening the yield gap between the US Dollar and its Australian counterpart. Meanwhile, developments in China’s economy remain just as relevant. If further signs of weakness appear, the effects on commodity prices—and, in turn, the Australian Dollar—could persist.
