The Aussie dollar, AUD/USD currency pair, displayed remarkable strength over the past week. It’s still going up, crossing from 0.5915 to 0.5910. In this regard, as of Monday, the pair has enjoyed positive traction for 4 consecutive days. The USD bias This trend is indicative of a big selling bias for the US dollar. Here are a few of the driving forces behind this movement. Whether due to recent US-China trade relations or an overall change in investor sentiment regarding the US economy, this is key.
The recent price action suggests the AUD/USD pair attempting to gather bullish momentum past the 100-day Simple Moving Average (SMA). Its sharp upward momentum has analysts predicting even more gains on the way if the current trends persist. Traders welcomed news that US President Donald Trump would not impose widespread reciprocal tariffs, but would instead delay them for 90 days. Their enthusiasm was extremely premature, as they quickly redirected their attention to the resumption of trade timer tensions and some important economic indicators.
Those worries have grown considerably after China’s Ministry of Finance last Friday announced it would be raising existing tariffs on US goods by 25%. The new tariffs increased duties from 84% to 125%, further intensifying the trade war between the two countries. This surprising turn of events, combined with a growing erosion of confidence in the US economy, has left investors scrambling to understand the implications and recalculate their bets. This has led the market to undergo a radical transformation. Not surprisingly, hordes of investors are dumping US government bonds, which has driven US Treasury yields to record lows.
Traders are on high alert as we get closer to the release of important economic data. Here in the United States, the big spotlight this Wednesday will be on US monthly Retail Sales figures. These numbers are poised to profoundly impact USD demand and supply key motivation for the AUD/USD to catalyze. US Bureau of Labor Statistics just reported a 0.1% decrease in the headline CPI – Consumer Price Index for March. This is a large deceleration in the annual pace, down from 2.8% in February to 2.4%. This widespread decline only puts more pressure on the dollar as it heightens fears about US economic performance.
Given the lack of substantive US economic data calendar-wise on Monday, it would seem the Greenback could be vulnerable to new trade-related headlines. Frequent communications detailing the state of US-China trade relations have a significant impact on market perception. All of these developments are pushing the dollar’s continued dollar weakness. The AUD/USD pair has attracted significant buying interest for the fourth day in a row. This increase is indicative of the anti-dollar mood that’s taken hold.
Last week, some analysts were afraid the AUD/USD pair would fall even further. Approaching the 0.6100 level, their strategists caution that it might even fall to as low as the 0.6135 support line. The US dollar is in a period of extreme weakness. This is an omen that the AUD/USD exchange rate is destined to soar. Traders are closely monitoring market developments and economic indicators, as they will likely dictate future price movements.