The Australian Dollar (AUD) trimmed earlier losses as hopes for a US–China trade deal supported sentiment. Traders are watching closely as China may finalise a long-term tariff agreement with the US before the August deadline. US Commerce Secretary Howard Lutnick stated that major trade deals could be secured in the coming weeks. This improved risk appetite and helped AUD/USD recover from session lows.
The AUD/USD pair faced pressure earlier after China kept its Loan Prime Rates unchanged. The People’s Bank of China held the one-year LPR at 3.00% and the five-year at 3.50%.
These rates influence corporate and household lending. Since Australia is closely tied to China’s economy, the lack of further stimulus from Beijing dampened AUD sentiment. However, a stronger-than-expected Chinese GDP growth of 5.2% in Q2, above the 5.1% forecast, offered some relief to the Aussie.
The 4-hour chart for AUD/USD shows that the pair is trading within an ascending broadening wedge pattern. The formation of an inverted head and shoulders pattern above the 0.64 level indicates bullish price action and suggests a potential move toward 0.6650. Bearish pressure on the US Dollar Index further supports the Australian Dollar’s strength, helping the pair remain stable above the 0.64 region.
