AUD/USD pair remains steady after the positive Australian trade data release. The chart below shows Australia’s trade data, which expanded to 5,620 million in January, exceeding the forecast of 5,500 million and improving from the revised 4,924 million. This improvement reflects strong export growth of 1.3% month-over-month, driven by rising non-monetary gold shipments. Meanwhile, imports fell 0.3%, easing concerns about rising domestic demand pressures. The robust trade data supports the Australian Dollar (AUD) by signaling a healthier external sector, reducing fears about economic slowdowns.
On the other hand, the US Dollar remains subdued as risk sentiment improves following President Trump’s tariff strategy shift. The White House announced a one-month exemption for automakers from tariffs on Mexico and Canada, reducing fears of immediate trade disruptions. Additionally, Trump is considering excluding certain agricultural products from tariffs, signaling a softer stance on trade. This policy shift has eased global risk concerns, weakening US Dollar demand as investors shift towards higher-risk assets, including the Australian Dollar. AUD/USD gained ground on the fourth consecutive day, with the US dollar losing strength.
Despite the bullish momentum, geopolitical risks pose a downside threat to AUD/USD. A Chinese foreign ministry spokesperson warned that China is prepared to fight “any type” of war in response to Trump’s escalating trade tariffs. China is Australia’s largest trade partner. Any escalation in US-China tensions could negatively impact Australian exports. This would put pressure on the Australian Dollar. While strong trade data and Trump’s policy shift support AUD/USD, heightened trade risks with China could limit further upside.
AUD/USD Technical Analysis – Descending Channel
The 4-hour chart for AUD/USD shows positive price action as the pair has turned bullish after completing its correction from $0.64. The immediate target for this upward move is $0.64, where an upside breakout is likely. The emergence of a symmetrical broadening pattern indicates strong volatility, and a break above $0.6450 could trigger a strong upward move.
