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The Australian Dollar (AUD) dropped against the US Dollar following renewed trade tensions between the US and China. President Trump raised tariffs on Chinese imports to 104%, triggering fears of further economic fallout. Given Australia’s strong trade ties with China, this move negatively impacted AUD sentiment. The AUD/USD pair remains volatile as the market digests the tariff news.
On the other hand, China responded by increasing tariffs on US imports to 84% and blacklisting six American firms. It also imposed export controls on companies like American Photonics and BRINC Drones. This escalation raised concerns about reduced Chinese demand for Australian goods. Moreover, China’s Consumer Price Index (CPI) fell 0.1% in March after a 0.7% drop in February, missing expectations. On the other hand, the Producer Price Index (PPI) also declined 2.5% year-over-year, deepening from February’s 2.2% fall.
AUD/USD Technical Analysis – Volatility
The 4-hour chart for AUD/USD shows the formation of a symmetrical broadening wedge pattern, with the price rebounding from its support. The strong rebound from this level reflects high volatility and suggests potential for further upside. This move was driven by oversold conditions, adding to the bullish bias. A break above $0.6450 is needed for AUD/USD to initiate a strong rally.
