AUD Surges as Trade Tensions Ease

The Australian Dollar is gaining ground, and this time, it's not just luck.

After jumping over 1.5% in a day, the AUD/USD pair pushed even higher on Wednesday. The move came after soft U.S. inflation data and positive signals around global trade, giving the Aussie a clear edge.

Let’s break down what’s driving the rally, and what traders should watch next.

Why the Aussie Is Climbing?

Here’s what’s giving AUD the lift right now:

1. U.S. Inflation Missed and the Dollar Took a Hit

U.S. CPI came in weaker than expected. That pushed the U.S. Dollar lower, as traders started pricing in fewer Fed rate hikes, and maybe even cuts.
That drop in USD gave risk currencies like AUD room to run.

2. Aussie Wages Are Picking Up Again

Australia’s Wage Price Index rose 0.9% in Q1, beating the 0.8% forecast, with 3.4% year-over-year growth, a clear rebound from last quarter’s slowdown and a reason for the RBA to tread carefully on rate cuts.

3. RBA Rate Cuts May Not Be as Deep as Expected

Markets were expecting the RBA to cut rates to 2.85% by the end of the year.
Now, those forecasts have moved up to around 3.1%, after the wage data.

Less easing = more support for AUD.

4. Political Stability in Australia

Prime Minister Anthony Albanese just started his second term after a clear election win.
His economic team is staying in place, and that means policy continuity, something investors like.

He’s also heading to Rome this weekend to meet with European leaders, including EU Commission President von der Leyen, to talk trade, another tailwind for AUD sentiment.

5. Trump Tones Down China Talk

Surprisingly, President Trump said the U.S. relationship with China is “excellent” and even hinted at talks with President Xi for a trade deal.

That calmed global markets, reduced risk-off pressure, and helped AUD, which usually gains when sentiment improves.

Technical Picture: AUD/USD Testing Key Resistance

AUD/USD is pushing up again, but bulls are running into a wall near 0.6500, the same level that triggered rejection earlier this month (marked by the red arrow).

Here’s what the updated daily chart shows:

• Price is hovering just below 0.6500, a clear resistance zone that’s already rejected price once.

• Support around 0.6345 has held multiple times (green arrows), making this a key demand area for buyers.

• If 0.6500 breaks and holds, the next logical target is the six-month high at 0.6515, and beyond that, 0.6687 (November 2024 high).

• On the downside, a clean drop below 0.6400 reopens room for a move to 0.6345, then 0.6272 and 0.6187.

• Major downside risk remains at 0.5913–0.5958, the area that marked the bottom during the March flash crash.

This AUD/USD move is macro-backed, not just momentum. Watch for a break above 0.6515, stay tuned to U.S. data and RBA tone, and don’t chase, wait for structure to confirm.