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Australian Dollar Strengthens Amid US Dollar Weakness
The Australian Dollar continues to strengthen as the US Dollar faces pressure from trade uncertainties and economic concerns. Despite a decline in Australia’s Consumer Inflation Expectations to 3.6% in March from 4.6% in February, AUD/USD remains strong. This suggests that traders prioritize external factors, such as the cooling US inflation data, which increases speculation of a potential Federal Reserve rate cut. The lower inflation in the US reduces the likelihood of aggressive monetary tightening, supporting the Australian Dollar’s bullish momentum.
Moreover, the trade policies also influence the AUD/USD movement. The US government confirmed a 25% tariff on imported steel and aluminium, affecting Australia’s key exports valued at nearly $1 billion. However, Australian Prime Minister Anthony Albanese ruled out retaliatory measures, emphasizing the need to avoid inflationary pressures at home. Meanwhile, Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser highlighted the impact of global trade disruptions, noting that prolonged uncertainty could weigh on economic activity. If trade tensions persist, investors may shift focus to Australia’s domestic economic resilience as a factor in currency valuation.
On the other hand, the US Dollar Index trades around 103.50 as investors assess the impact of slowing inflation and trade disputes. US headline inflation eased to 0.2% in February from 0.5% in January, as shown in the chart below.
AUD/USD Technical Analysis – Bullish Momentum
The 4-hour chart for AUD/USD shows that the pair is forming a bullish price action and appears poised for an upside move. The strength in gold (XAU) prices following the release of CPI data further supports the bullish outlook for the Australian dollar, keeping AUD/USD on an upward trajectory. The target for AUD/USD remains the symmetrical broadening wedge pattern resistance line at $0.6440.
