Australian Dollar rises to multi-month highs after US Retail Sales data

• Aussie edges higher following delayed reciprocal tariffs.
• US Retail Sales contracted, disappointing market forecasts.
• Fed watchers see 55% chance rates remain on hold in March.
• RBA rate cut speculation remains amid cooling domestic inflation.

The Australian Dollar (AUD/USD) strengthens for the second consecutive day on Friday, supported by US President Donald Trump's decision to delay implementing reciprocal tariffs. At the same time, concerns linger over a potential global trade war, especially if further tariff measures are announced later. Market participants also dumped the USD after weak Retail Sales data from the US.

Daily digest market movers: Aussie gains after US data

• President Trump postponed a 25% tariff on selected imports, offering short-lived optimism for risk-linked currencies like the Australian Dollar.
• Recent trade frictions have tempered the US Dollar's gains as the currency treads water amid Washington's uncertain stance on tariffs.
• Thursday's US Retail Sales data showed a -0.9% MoM contraction in January, missing the -0.1% forecast and stoking fears of a slowing economy.
• Industrial Production advanced 0.5% in January , down from 1% in December yet beating the 0.3% estimate, generating mixed signals about the health of the US economy.
• Poor Retail Sales figures could prompt traders to reduce bets on the Federal Reserve maintaining interest rates in the 4.25%-4.50% range for an extended period, though Fed Chair Jerome Powell hinted that policy changes hinge on verifiable inflation or labor-market weakness.
• Despite the Aussie's steady tone, speculation of a 25-basis-point Reserve Bank of Australia rate cut remains high, citing cooling inflationary pressure and a subdued consumer outlook.

AUD/USD technical outlook: Bulls maintain momentum above 20-day Simple Moving Average

The AUD/USD pair gained 0.65% to reach 0.6355 on Friday, extending its climb above the 20-day Simple Moving Average (SMA). The Relative Strength Index (RSI) sits at 66, hovering near overbought territory but still rising sharply, signaling robust buyer interest.

Meanwhile, the Moving Average Convergence Divergence (MACD) histogram prints increasing green bars, indicating building upside momentum.

With the pair hitting its highest levels since December, traders remain alert to looming uncertainties, including fresh tariff announcements and US data surprises, which could rapidly shift the market's direction.