Ethereum (ETH) maintained its trading position near $3,140 on Tuesday, amidst a fluctuating economic landscape marked by shifting currency values and impending policy decisions. Meanwhile, the Australian dollar faced continued pressure against the US dollar, extending its negative start to the week. The AUD/USD pair dropped to a five-day low near 0.6230, reflecting broader market uncertainties fueled by resurgent US dollar strength and global trade tensions.
The Reserve Bank of Australia (RBA) has kept the Official Cash Rate (OCR) steady at 4.35% since November 2023, adhering to its target inflation band of 2% – 3%. Despite this stability, the Australian economy is facing headwinds from external factors, including proposed US tariffs. Treasury Secretary Scott Bessent has advocated for new universal tariffs on US imports, starting at 2.5% and potentially increasing over time. These tariffs could significantly impact global trade dynamics, particularly with China, a major trading partner for many countries, including Australia.
RBA Governor Michelle Bullock expressed concerns about the potential implications of increased tariffs on Chinese goods and services.
"If there are large tariffs on China, Chinese trade will probably try to find other ways to find an outlet. Australia might even be a beneficiary of that. So we might, in fact, find some deflationary impacts for Australia if it rolls out that way." – Michelle Bullock
The Australian monthly Consumer Price Index (CPI) is projected to reach 2.5% in December. This figure aligns with the RBA's inflation target range but remains a critical indicator for potential future monetary policy adjustments. The Reserve Bank of Australia is scheduled to meet on February 18 to reassess its monetary stance, with the possibility of an interest rate cut if inflation figures fall below expectations.
Valeria Bednarik, a market analyst, highlighted the ongoing bearish trend in the AUD/USD pair.
"The AUD/USD pair is gaining bearish traction ahead of Australian CPI figures amid a risk-averse environment. The USD is firmer as tariffs-related concerns dominate financial boards. Further slides are likely should inflation data result as expected or below expectations. On the contrary, higher-than-anticipated figures may trigger some near-term AUD/USD gains, yet if fears prevail, the advance will likely be short-lived." – Valeria Bednarik
The Australian economy registered a modest growth of 0.3% in the third quarter of 2024, with an annual increase of 0.8% since Q3 2023. However, the RBA Trimmed Mean CPI, a preferred measure of core inflation, is forecast to rise by only 0.6% quarter-on-quarter. This represents the lowest quarterly increase since mid-2021 and could influence the RBA's upcoming policy meeting.
In light of these developments, Bednarik further analyzed potential movements for the AUD/USD pair.
"The AUD/USD pair could fall towards the 0.6200 region as an immediate reaction to the news, while a bearish breakout exposes 0.6164, the January 17 low. Should that level give up, the next bearish target is the January 13 low at 0.6130. Technical readings in the daily chart suggest a limited bullish potential. Still, a recovery beyond the 0.6300 threshold may result in the pair testing the 0.6330 price zone before fresh selling resurges." – Valeria Bednarik
Amidst these challenging conditions, Ethereum's relative stability offers some respite for investors seeking refuge from currency market volatility. While Ethereum holds its ground around $3,140, market participants remain vigilant as they anticipate further economic data releases and geopolitical developments.