- AUD/USD climbs to a monthly high near 0.6300 as Trump hints at lower-than-expected tariffs on China.
- The US Dollar Index rebounds after hitting a two-week low around 107.75.
- Investors now turn their attention to the flash US S&P Global PMI data for January.
The AUD/USD pair revisits its monthly high near 0.6300 during Wednesday’s North American session, gaining momentum as the Australian Dollar (AUD) strengthens on reports of lower-than-expected US tariffs on China. US President Donald Trump announced plans to raise tariffs on China by 10% starting February 1, significantly below the 60% initially proposed during his campaign. This news benefits the AUD, given Australia’s strong trade ties with China.
Meanwhile, the US Dollar (USD) trims its intraday losses, with the US Dollar Index (DXY) rebounding from a two-week low of 107.75.
Looking ahead, investors await Friday’s release of the preliminary US S&P Global PMI data for January.
Technically, AUD/USD has recovered from a more-than-four-year low of 0.6170, supported by a divergence between momentum and price action. The 14-period Relative Strength Index (RSI) formed a higher low while the pair made lower lows on the four-hour chart. The pair is now approaching the 200-period Exponential Moving Average (EMA) at 0.6300, with the 20-day EMA sloping upward near 0.6247, indicating a shift to a bullish near-term trend.
A sustained move above 0.6300 could target the December 18 high of 0.6340, followed by round-level resistance at 0.6400. Conversely, a break below the January 13 low of 0.6131 could lead to further downside toward the round-level support at 0.6100 and the April 2020 low of 0.5990.
AUD/USD 4-hour chart
