AUD/USD rebounded slightly during the Asian trading session on Thursday as the European Union agreed to restart free trade negotiations with Australia. EU Trade Commissioner Maros Sefcovic held a video conference with Australian Trade Minister Don Farrell;

Both parties intend to set a new timetable to resolve the agricultural access dispute; Analysts believe that if progress is made on the agreement, it may improve Australia's export environment to Europe in the long term.

For Australia, this is an important step towards restarting multilateral cooperation, especially against the backdrop of rising market uncertainty in Asia, "according to market research.

US President Trump announced an increase in tariffs on imported goods from major Asian countries to 125%, causing market panic and suppressing the Australian dollar, which is highly dependent on commodities.

Australia, as a trading partner of a major Asian country, may be indirectly affected, especially in terms of iron ore and energy exports; Previously, the Australian dollar fell below 0.6150 against the US dollar, reaching a new low in nearly four years.

The escalation of global trade uncertainty undoubtedly brings greater downward pressure to the Australian economy, "said an Asia Pacific economic research expert.

The latest data from Australia shows that consumer and business confidence continues to decline, further exacerbating market expectations for future monetary easing. The Westpac Consumer Confidence Index fell 6% in April, marking the first decline since 2024;

The NAB Business Confidence Index has dropped to -3, approaching its lowest level since the outbreak of the pandemic; The market expects the Reserve Bank of Australia to initiate interest rate cuts in May, with a potential annual rate cut of up to 100 basis points.

This means that the Australian dollar still faces significant downward pressure on fundamentals.

The Federal Reserve's policies will continue to have a critical impact on AUD/USD, with investors focusing on the upcoming release of US CPI data. The market expects the year-on-year increase in US CPI in March to be 3.4%, and if it is higher than expected, it may suppress expectations of interest rate cuts;

The minutes of the Federal Reserve meeting show that decision-makers still believe that inflation and growth face a "dual threat," but their actions remain cautious; According to the FedWatch tool, there is only a 40% chance of a rate cut in May. This means that there is still short-term support for the US dollar, which may limit the rebound space of the Australian dollar.

From a technical perspective, the Australian dollar continues to decline against the US dollar, currently hovering around 0.6140. The current price is below the 9th and 50th EMAs, indicating a bearish short-term trend; RSI below 50 indicates weak kinetic energy; If it falls below 0.5900, it may trigger a larger scale technical sell-off

Editor's viewpoint:

The resumption of negotiations between Australia and the European Union has indeed sent some positive signals, but against the backdrop of global trade tensions and continued weakness in Australia's domestic data, the upward potential of AUD/USD may be limited. The future trend will largely depend on US inflation data and the direction of the Federal Reserve's monetary policy. In the short term, unless the Federal Reserve significantly dovish, the Australian dollar is unlikely to emerge from its downward trend.