AUD/USD edges higher despite tariff concerns

• Trump reiterates tariff threats on Mexico, Canada, and China.
• Fed maintains cautious stance on inflation risks, holding rates steady.
• AUD/USD hovers near 0.6215 amid RBA rate cut bets and China's economic slowdown.

The AUD/USD pair trades slightly higher at 0.6215 in the Asian session on Friday but remains under pressure due to fresh tariff threats from US President Trump. Market participants continue to anticipate a dovish shift from the Reserve Bank of Australia (RBA) in February, adding to the Aussie's downside risks. 

Trade tensions weigh on sentiment

Trump reaffirmed plans to impose tariffs on Mexico, Canada, and China, fueling safe-haven demand for the US Dollar and claiming to plan to impose 100% tariffs on BRICS nations if they try to replace the US Dollar (USD) with a new currency in international trade. Trump posted on TruthSocial: "We are going to require a commitment from these seemingly hostile countries that they will neither create a new BRICS currency, nor back any other currency to replace the mighty US Dollar or, they will face 100% tariff,

On the data front, the US Core Personal Consumption Expenditures (PCE) Price Index rose 0.2% month-on-month as expected, while annual core PCE remained unchanged at 2.8%. Fed officials, including Governor Michelle Bowman, warned of lingering upside inflation risks, reinforcing expectations that rate cuts could be delayed.

In Australia, the latest data reinforced expectations that the RBA will pivot to policy easing. Q4 inflation figures came in lower than anticipated, with trimmed mean CPI easing to 3.2%, below the RBA's previous forecast of 3.4%. Traders now fully price in a 25-basis-point rate cut at the February meeting.

Technical overview

AUD/USD remains range-bound, lacking strong directional momentum. The Relative Strength Index (RSI) is at 47, still in negative territory but recovering. The MACD histogram shows decreasing green bars, suggesting fading bullish momentum.
Immediate resistance is seen at 0.6230 at the the 20-day Simple Moving Average (SMA). On the downside, key support lies at 0.6200, with a break lower opening the door to further declines toward 0.6170. Until a decisive move occurs, the pair is likely to consolidate within the current range.