Australian Dollar declines on sour market mood

• The AUD/USD declines on Monday, erasing part of last week's rebound as risk sentiment weakens.
• Investors react to US President Donald Trump's comments, signaling potential turbulence ahead for the American economy.
• China's inflation data showed a faster-than-expected decline, raising concerns over demand for Australian exports.
• Technical indicators suggest a bearish outlook, with AUD/USD struggling to reclaim a key moving average.

AUD/USD fell by 0.40% on Monday as risk-off sentiment weighed on the pair. Concerns over a slowdown in the United States (US) economy initially supported the Australian Dollar (AUD), but weak Chinese inflation data and trade tensions pressured the pair lower. President Donald Trump's comments about a "transition period" raised uncertainty over the US outlook, while a sharper-than-expected drop in China's Consumer Price Index (CPI) signaled weakening demand, reinforcing downside risks for AUD/USD.

Daily digest market movers: Australian Dollar pressured as global risks intensify

• US economic concerns deepened after President Donald Trump described the economy as being in a "transition period," suggesting a potential slowdown. Investors interpreted his remarks as an early warning of possible economic turbulence in the near term.
• A series of weak US economic indicators further fueled uncertainty. Consumer confidence fell to its lowest level in 15 months, the ISM Manufacturing New Orders Index declined, and the unemployment rate showed an unexpected rise in February.
• The Australian Dollar struggled as China's CPI declined by 0.7% year-over-year, exceeding the expected 0.5% drop, while the month-over-month figure contracted by 0.2%, reflecting weakening demand. Persistent disinflation in China suggests underlying economic fragility, which could negatively impact Australia's export-driven economy.
• Trade tensions remain a major market factor. New tariffs including a 25% levy on Canadian and Mexican products and a 20% duty on Chinese imports have heightened investor fears of an escalating trade conflict. Given China's importance as Australia's largest trading partner, any slowdown in Chinese demand poses a significant risk to the Australian Dollar.
• The US Dollar Index (DXY) remained under pressure, hovering near sub-104.00 levels, as uncertainty around future trade policies and economic growth limited upside potential. Meanwhile, the Australian Dollar fluctuated around the 0.6300 zone, reflecting the broader cautious sentiment in currency markets.
• Commodity market performance remains a key driver of AUD price action. Copper prices extended Friday's losses, while iron ore continued its decline amid a broader multi-day consolidation phase, adding to concerns over AUD sustainability.
• Looking ahead, investors will focus on key US economic releases this week. The US Consumer Price Index (CPI) data for February, scheduled for release on Wednesday, is expected to shape expectations regarding Federal Reserve policy, influencing AUD/USD price action.

AUD/USD Technical Analysis: Downside pressure builds as recovery stalls

The AUD/USD pair fell on Monday, moving toward a key support zone as sellers gained momentum. The pair struggled to hold early gains and retreated as concerns over the US and Chinese economies weighed on risk sentiment. The Moving Average Convergence Divergence (MACD) indicator continues to print decreasing red histogram bars, reinforcing bearish momentum. Meanwhile, the Relative Strength Index (RSI) has dropped to 48, entering negative territory and signaling increased downside risks.

The pair is trading below the 20-day Simple Moving Average (SMA), and a failure to reclaim this level could accelerate losses. If bearish momentum persists, support is seen near the 0.6200 zone, while resistance remains at 0.6320, with a break above that level needed to shift sentiment toward the bulls.