Australian Dollar stabilizes amid looming US tariffs threats

• Pair inches up after dipping to the 0.6220 zone on Tuesday.
• Trump's hinted tariffs on China weigh on risk assets, tempering AUD gains.
• RBA is likely to cut rates in February, keeping the Aussie on the defensive.

The Australian Dollar (AUD) mildly rose to 0.6270 on Tuesday, recovering after briefly falling near 0.6220 when United States (US) President Donald Trump reiterated plans to impose tariffs on China. Although the Reserve Bank of Australia (RBA) is widely expected to initiate a rate cut in February, the currency found modest footing in a calmer market atmosphere. Investors, however, remain cautious as the US Dollar (USD) climbs on revived tariff concerns.

Daily digest market movers: Aussie recovers mainly as markets await US tariffs directions

• In the wake of President Trump's inauguration, the administration directed agencies to probe ongoing trade imbalances and currency manipulation, especially targeting China, Canada and Mexico.
• Despite uncertainties over Trump's early trade agenda, a softer US Dollar provided a lift to stock markets in Europe and the US, as well as risk-driven currencies such as the Aussie.
• The CME FedWatch tool suggests a 55.6% chance the Federal Reserve (Fed) will hold rates steady at its May gathering, with rising chatter about a potential rate decrease by June.
• US 10-year yields hover around 4.60%, while US bond markets are calm following Martin Luther King Jr. Day. Traders brace for possible updates on tariffs policies in the days ahead.
• On the local front, markets are gearing up for a cut by the Reserve Bank of Australia as early as next month which might prevent any upside.

AUD/USD technical outlook: Indicators hint at choppy momentum amid bullish undercurrents

The AUD/USD pair's price action remains volatile, briefly sliding toward 0.6220 before rebounding to 0.6275. The Relative Strength Index (RSI) currently sits around 52--still in positive territory but sharp, indicating a potential waning of bullish momentum. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram exhibits rising green bars, supporting a constructive near-term view.

Although the Aussie's short-lived dip underscores lingering downside risks, a sustained break above recent highs near 0.6300 could reinforce the pair's recovery if trade policy anxieties recede.