The Australian Dollar (AUD) continues its upward trend against the US Dollar (USD), reaching near 0.6300 despite global trade uncertainties. While the US Dollar Index (DXY) retreats to test support levels, AUD/USD benefits from Australia's rising consumer confidence and easing inflationary pressures. The Reserve Bank of Australia (RBA) is poised to cut interest rates, further supporting the AUD. However, tariffs on Chinese imports and potential retaliation pose risks to the Australian economy.
AUD/USD added to Monday’s uptick but faltered ahead of 0.6300. Chief Powell’s testimony failed to lend support to the US Dollar. Australia’s Consumer Confidence rose by 0.1% in January, Westpac said. The US Dollar has faded part of the optimism seen at the beginning of the week, coming under renewed downside pressure and motivating the US Dollar Index to flirt once again with the 108.00 key support.
Inflation, Fed policy, and what lies ahead In the meantime, while the US Dollar has regained part of the ground lost during the first half of last week, the threat of a full-blown trade war still looms. Such tensions could drive up inflation in the US, pushing the Federal Reserve to keep interest rates high for a longer period. Meanwhile, all eyes are on the Reserve Bank of Australia .
AUDUSD US Dollar Australian Dollar Trade War Tariffs RBA Inflation Federal Reserve
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