Australian Dollar swings amid Trump's tariff announcement on US copper imports

The Australian Dollar (AUD) found support as copper futures hit a record high on the Comex exchange Tuesday, benefiting from Australia’s status as a major copper exporter. Bloomberg reports that Trump may fast-track tariffs on US copper imports, potentially implementing them within weeks instead of the original 270-day review period set by the Commerce Department in February 2025.

However, the AUD edged lower against the US Dollar (USD) following Wednesday’s release of the Monthly Consumer Price Index (CPI), which rose 2.4% year-over-year in February—slightly below January’s 2.5% increase and market expectations.

Treasurer Jim Chalmers unveiled Australia’s 2025/26 budget on Tuesday, detailing A$17.1 billion in tax cuts across two rounds. The budget projects a deficit of A$27.6 billion for 2024-25 and A$42.1 billion for 2025-26, with GDP growth forecasts of 2.25% in 2026 and 2.5% in 2027.

The AUD remains supported as investors expect the Reserve Bank of Australia (RBA) to keep interest rates steady next week, following its first rate cut in four years this past February. RBA Assistant Governor Sarah Hunter reaffirmed the bank’s cautious stance, emphasizing a measured approach to further rate adjustments.

Additionally, expectations of Chinese stimulus could boost the Australian economy, as China’s government signals plans to increase wages and ease financial burdens to stimulate consumer confidence. Given Australia’s strong trade ties with China, such measures could have a positive impact on the AUD.

Australian Dollar Faces Pressure as US Dollar Gains Strength Amid Market Uncertainty

• The US Dollar Index (DXY) rebounded to 104.30, recovering from recent losses as market caution intensified ahead of Trump’s April 2 tariff announcement. While Trump hinted that some countries may receive exemptions, the specifics remain uncertain. Reports indicate that Canada could face lower-end tariffs, but details of a potential tiered structure are still unclear.
• Economic data from the US further supported the Greenback. The S&P Global Composite PMI climbed to 53.5 in March, marking the strongest growth since December 2024, while the Services PMI jumped to 54.3, a three-month high. However, the Manufacturing PMI fell to 49.8, missing expectations.
• Federal Reserve (Fed) officials continued to emphasize policy uncertainty. Governor Adriana Kugler noted that inflation progress has slowed, calling the recent rise in goods prices “unhelpful.” Meanwhile, Atlanta Fed President Raphael Bostic revised his 2025 rate cut expectations downward, citing inflation persistence and trade risks.

AUD/USD Pulls Back from 0.6300, Facing Resistance at Nine-Day EMA

The AUD/USD pair trades near 0.6280 on Wednesday, maintaining a bearish bias within a descending channel. The 14-day Relative Strength Index (RSI) remains below 50, indicating continued downside momentum.

Key technical levels include support at 0.6210, near the lower boundary of the descending channel, and 0.6187, a seven-week low from March 5. On the upside, resistance at 0.6306, aligned with the nine-day Exponential Moving Average (EMA), remains a key hurdle. A breakout above this level could shift momentum toward the monthly high of 0.6391, reached on March 18.

AUD/USD: Daily Chart