The Australian dollar continued its slide against the U.S. dollar on Friday, with the AUD/USD pair hovering around 0.6190, down from earlier weekly highs. Market sentiment soured following confirmation that U.S. tariffs on Chinese goods have reached 145%, reigniting fears of a prolonged trade war between the world’s two largest economies.
This aggressive move by Washington was met with swift retaliation from Beijing, which imposed tariffs on 84% of U.S. imports and blacklisted six American firms. Among the companies targeted were defense contractors like Shield AI and Sierra Nevada Corp., reflecting the rising geopolitical stakes.
Despite briefly trading above the nine-day Exponential Moving Average (EMA), the AUD/USD pair remains vulnerable. The 14-day Relative Strength Index (RSI) lingers below 50, signaling that bearish sentiment persists.
Support, Resistance, and Technical Outlook
From a technical perspective, the pair faces near-term support at 0.6167 (9-day EMA). A break below this could lead to further losses toward 0.5914, a low not seen since March 2020. The critical psychological support sits at 0.5900.
To the upside, recovery hinges on a decisive move above the 50-day EMA at 0.6260, potentially setting the stage for a push toward the 0.6408 four-month high.
Key Levels to Watch:
- Resistance: 0.6260 (50-day EMA), 0.6408 (4-month high)
- Support: 0.6167 (9-day EMA), 0.5914, 0.5900 (psychological level)
While Australia gains some diplomatic traction through renewed trade talks with the European Union, the broader market remains dominated by the ongoing superpower standoff and investor risk aversion.
Inflation Data and Central Bank Signals
Recent U.S. inflation readings offered modest relief, with headline CPI easing to 2.4% in March—well below expectations. Core CPI also decelerated to 2.8% annually, suggesting weakening inflation pressures that could influence Federal Reserve policy.
Meanwhile, Australia’s economic outlook remains clouded. Soft business and consumer sentiment are increasing bets that the Reserve Bank of Australia (RBA) will begin cutting rates soon. Markets are pricing in 100 basis points of cuts this year, with the first expected as early as May.
In China, worsening inflation data compounds the uncertainty. The CPI fell 0.1% YoY, while the PPI shrank by 2.5%, pointing to deflationary risks that could dampen regional growth and further weigh on the Aussie dollar.
As global trade dynamics continue to shift and central banks recalibrate their stance, the Australian dollar looks set for more volatility ahead. Traders will closely watch upcoming U.S. PPI and Consumer Sentiment data, as well as further headlines from Beijing and Washington.
