The AUD/USD pair has dropped to about 0.6450 during North American trading. This is down from its six-month high of 0.6537. This change comes as the US Dollar gains strength due to reduced trade tensions between the US and the EU. The US Dollar Index has risen to around 99.40, up from a previous low of 98.70. The boost in the Dollar is linked to the recent suspension of 50% tariffs on imports from the Eurozone.

Durable Goods Orders and Inflation Data

In April, US Durable Goods Orders fell by 6.3%, following a March increase of 7.6%. This decline was better than the expected drop of 7.9%. Meanwhile, the Australian Dollar is weakening as investors wait for the Monthly Consumer Price Index data. This data is expected to show a slight growth of 2.3%, down from March’s 2.4%. The Australian Bureau of Statistics frequently provides insights into inflation. Weak inflation numbers could lead the Reserve Bank of Australia to consider cutting interest rates further. Given these updates, we are seeing a pullback in AUD/USD from its earlier highs, with prices now near 0.6450 after reaching a six-month peak. The brief high of 0.6537 was not stable. Looking deeper, the rise in the US Dollar isn’t just from strong economic data. Instead, it’s due to decreased tensions, especially after the US announced a temporary suspension of half of its tariffs on EU imports. This news has shifted the market sentiment, pushing the Dollar higher, with the DXY rising to about 99.40 after falling to 98.70. This increase in the Dollar comes despite disappointing manufacturing data from the US. Durable goods orders showed a 6.3% decline in April, although this was slightly better than expected, indicating a slowdown after the significant rebound in March. In Australia, there is increasing concern over inflation data. The expected drop from 2.4% to 2.3% in the Monthly Consumer Price Index adds pressure on the Australian Dollar. It’s important to assess not just the headline figures, but what a slight slowdown may mean for central bank policy. A lower-than-expected result would suggest there is room for further interest rate cuts.

Future Economic Insights

The Reserve Bank of Australia is cautious about moving too quickly, but weak inflation data could push policy-makers towards more dovish stances. Low inflation leaves little room for future rate hikes. Short-term strategies now need to consider both technical and fundamental factors. Volatility may increase based on how actual data compares to expectations, especially during Asia-Pacific trading hours. If the RBA adopts a dovish tone due to softer inflation, the Australian Dollar could face downside risks. As momentum shifts against the local currency, we are closely monitoring price movements around 0.6450. Ongoing strength in the Dollar and weaker domestic inflation may push that level into short-term support, with the potential to test even lower levels if upcoming economic data does not surprise positively. Tracking rate expectations in the forward market will be key to understanding whether the market has priced in monetary responses or if further adjustments are needed. Watch for any changes in rate expectations as new data comes in from both Washington and Canberra. Carefully timing entries around these releases is crucial. Significant movements are becoming less common, so most trading activity may happen in short bursts. Being flexible with positioning, especially around major risk events, remains critical. Create your live VT Markets account and start trading now.

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