AUD/USD falls close to 0.6200 following US PCE data and tariffs announcement

• The Australian Dollar continues its decline, falling roughly 0.54% and nearing the 0.6200 level, approaching multi-week lows.
• After six consecutive days of losses, the AUD/USD pair has broken below the 20-day Simple Moving Average, indicating increased bearish momentum in the short term.
• Market sentiment is affected by new tariff threats from President Trump, who has proposed an additional 10% tariff on Chinese goods.
• The latest PCE data from the US for January aligned with market forecasts.

In Friday’s trading session, the AUD/USD pair hit a new three-week low near 0.6200, continuing its downward trend for the sixth consecutive day. The Australian Dollar was already facing downward pressure but was further weakened by the announcement of new tariffs on Chinese imports by US President Donald Trump on Thursday. Additionally, inflation data in the form of the US Personal Consumption Expenditures (PCE) for January met expectations, alongside significant discussions during Trump’s meeting with the Ukrainian president.

Daily Market Digest: Australian Dollar Suffers Amid Trade Tensions and Domestic Economic Weakness

• President Trump’s announcement of a new 10% tariff on Chinese imports adds to the existing trade barriers, raising concerns about escalating trade tensions. Tariffs on goods from Mexico and Canada are also expected to be implemented next week.
• The Australian Private Capital Expenditure for Q4 2024 unexpectedly contracted by 0.2% quarter-over-quarter, falling short of the anticipated 0.8% growth, signaling weak investment activity and shaking confidence in Australia’s economic outlook.
• Deputy Governor of the Reserve Bank of Australia, Andrew Hauser, remains hopeful about inflation improvements but advises caution due to tight labor market conditions and uncertain price trends.
• In the US, the Core Personal Consumption Expenditures Price Index, a crucial inflation indicator for the Federal Reserve, increased by 0.3% month-over-month in January, aligning with expectations and influencing Federal Reserve policy considerations amidst ongoing trade disputes.
• Ukrainian President Volodymyr Zelenskyy’s rejection of President Trump’s proposal for a “rare earth deal” led to a sharp response from Trump and Vice President JD Vance, as per White House insiders.
• The failed deal, which involved swapping defense assurances for mineral rights, was criticized by Zelenskyy as vague and inadequate to counter Russia’s advances, with a more appealing offer reportedly coming from the European Union, further souring US-Ukraine relations.

AUD/USD Technical Analysis: Bearish Pressure Intensifies as Price Falls Below Key Moving Average

The AUD/USD pair declined by about 0.54% on Friday, trading near the 0.6200 mark and extending its losing streak to six days, breaching the 20-day Simple Moving Average. The Relative Strength Index (RSI) is trending lower, indicating reduced bullish momentum, while the Moving Average Convergence Divergence (MACD) histogram shows a decline in upward pressure with shrinking green bars. Key support may appear near the 0.6150 level, while any recovery could face resistance at the 20-day SMA, depending on shifts in risk sentiment or easing tariff concerns.