Major US stock indices have increased. The White House is reportedly considering a 90-day tariff delay, excluding China, though this has been contested by officials.
The AUDUSD pair responded positively to the stock recovery, reflecting a risk-on sentiment. However, conditions regarding China may negatively affect the currency pair.
AUDUSD Technical Analysis
Technically, AUDUSD has risen above the February low at 0.60874 and the 38.2% retracement level at 0.61139. It faced resistance at the swing low from January 13 at 0.61306, which is now a target for further upward movement; dropping below 0.60874 could harm buying prospects.
An update indicated that the White House is not confirming a 90-day pause on tariffs.
Following recent reports about potential policy developments in the United States, broad sentiment in the market has tilted moderately in favour of risk assets. The suggestion that a temporary easing of certain trade measures might be under discussion—despite some officials pushing back on the claim—was enough to boost equities. This, in turn, has had ripple effects beyond equity markets and into currency pairs more sensitive to risk positioning.
Market Sentiment and Trade Policy
One such pair, the Australian dollar against the US dollar, has seen measurable strength. Our reading is that the upward pressure on the pair aligns closely with a general shift towards risk appetite, rather than any direct change in underlying fundamentals. Since equity markets tend to lead short-term sentiment, it’s unsurprising that this currency pair responded by breaking several clearly defined technical thresholds.
Price action lifted it over two levels widely watched by technical traders. These included the February trough and a Fibonacci retracement from a larger downside move beginning in January. These levels—previously acting as resistance—now set the stage for potential support zones if prices retreat. However, it’s not about blindly buying dips. Any slip back under the February low, the one we had around 0.60874, would be reasonably interpreted as momentum fading. In that scenario, long set-ups would become considerably less appealing, at least for now.
Resistance around the 0.613 handle, marked by the January swing low, has not been decisively broken. Until it is, further upside movement may run into sellers with memory of past highs. If it does give way, short-term traders might rotate into trending strategies rather than stay range-bound.
Meanwhile, there’s still some murkiness concerning the direction of U.S. trade policy. Although initial headlines hinted at a 90-day pause on new tariffs, further updates have undercut those earlier reports. Given this back and forth, we should expect tactical adjustments to be needed often.
This stiffness in trade talk sentiment, particularly where China is concerned, isn’t just rhetoric. It has actual weight behind the moves we’re seeing in correlated assets. Some regions will be more exposed than others depending on how talks evolve. For now, though, what’s clear is we’re in a short-term environment where headlines alone are driving sharp, if sometimes contradictory, reactions.
What matters from here is recognising how quickly sentiment leans in one direction when macro headlines emerge, but also how that can reverse just as fast. This isn’t a time for mechanical trading on fixed rules. Market participants would need to remain nimble, assess any breaks of key levels with scepticism until confirmed, and track equity performance for cues rather than waiting solely on economic releases.
Until key resistance is comfortably cleared, bets on extended rally legs remain speculative and should be managed accordingly.
