Australian Dollar Pulls Back as US-China Trade Hopes Boost USD Strength

AUD/USD Loses Momentum as US Dollar Strengthens on US-China Trade Optimism

Forex Update – June 10, 2025

The Australian Dollar (AUD) edged lower against the US Dollar (USD) on Tuesday, paring earlier gains as investor optimism around US-China trade negotiations gave the Greenback a lift. The AUD/USD pair is now consolidating, driven by both economic releases and broader sentiment shifts.

AUD Faces Pressure from Weaker Consumer Confidence

Australia’s Westpac Consumer Confidence Index rose by just 0.5% month-on-month in June, a noticeable slowdown from May’s 2.2% increase. This weaker domestic sentiment weighed on the Aussie, particularly as investors reassess Australia's growth momentum amid persistent inflation and high borrowing costs.

📊 Related Read: Australia’s Economic Sentiment and Its Impact on the AUD

US-China Trade Hopes Reinforce USD Recovery

The US Dollar regained ground as hopes grew that the United States and China might ease recent tariff tensions. A second meeting between US and Chinese trade advisors is scheduled in London on Tuesday, with President Trump suggesting talks are “going well.”

This sentiment shift helps support the USD and has led to reduced safe-haven demand, further pressuring the AUD/USD cross.

Eyes on US CPI Inflation Report

Attention now turns to the US Consumer Price Index (CPI) due on Wednesday, which is expected to show a 2.5% YoY rise in May, compared to 2.3% in April. A stronger-than-expected reading may signal limited room for near-term Federal Reserve rate cuts, which could add to USD strength and weigh further on AUD/USD.

📰 Also See: How US CPI Could Influence the Fed and USD

Technical Outlook: AUD/USD

• Support Levels: 0.6600, 0.6565
• Resistance Levels: 0.6660, 0.6695

The pair may remain range-bound ahead of the US inflation data, with a potential downside bias if risk sentiment weakens.