AUD/USD slumps on US Dollar's strong recovery despite soft PPI data

• The AUD/USD tumbles on Thursday as the US Dollar strengthens amid renewed trade policy concerns.
• Trump's tariff threats fuel risk aversion, overshadowing softer-than-expected US inflation data.
• US PPI data signals weaker inflation, but investors remain focused on escalating trade tensions.
• Technical indicators suggest further downside with AUD/USD losing key support levels.

The AUD/USD tumbles to near 0.6280 as the US Dollar outperforms on the Trump administration's tariff agenda. The pair faced sharp selling pressure on Thursday as renewed fears of a global economic slowdown triggered a flight to the US Dollar.

Investors largely ignored softer US CPI and PPI data for February, instead focusing on US President Donald Trump's aggressive trade stance. His renewed commitment to "America First" policies stoked fears of retaliatory measures, weighing on risk-sensitive assets like the Australian Dollar.

Daily digest market movers: Australian Dollar under pressure as trade fears escalate

• The US Dollar Index (DXY) rebounded sharply, reaching 104.00 after recovering from a four-month low of 103.20. The Greenback gained as traders turned to safe-haven assets amid heightened concerns over trade policy.
• Trump reiterated his protectionist stance, stating that the US does not have "Free Trade" but "Stupid Trade" in a Truth Social post. His comments reinforced expectations of further tariffs on key trading partners.
• New tariffs on European imports further rattled markets. Trump confirmed retaliatory duties on 26 billion Euros worth of Eurozone goods after the EU imposed countermeasures against the 25% universal import duty the US placed on steel and aluminum.
• US inflation data was softer than expected but failed to weaken the US Dollar. The Producer Price Index (PPI) fell to 0.0% in February, well below the 0.3% estimate, while core PPI contracted by 0.1%. Despite weak inflation figures, markets focused on rising geopolitical and trade risks.
• The Australian Dollar struggled amid deteriorating risk sentiment. The currency, which closely reflects Chinese economic performance, faced headwinds as the US maintained 20% tariffs on Chinese imports, raising fears of a further slowdown in Australia's key trading partner.
• Markets are also monitoring diplomatic developments as US officials visit Russia to discuss a potential ceasefire agreement with Ukraine. However, geopolitical tensions remain elevated, adding further support to the US Dollar.
• Looking ahead, traders will closely watch Australia's labor market report, due March 20, for insights into the Reserve Bank of Australia's (RBA) potential policy direction.

AUD/USD Technical Analysis: Downside pressure intensifies as key support breaks

The AUD/USD dropped on Thursday, moving toward the 0.6280 region during the American session, as selling momentum intensified. The pair struggled to find support with trade risks and a stronger US Dollar keeping pressure on the Aussie.

The Moving Average Convergence Divergence (MACD) indicator continues to print flat red bars, signaling fading momentum but maintaining a bearish bias. Meanwhile, the Relative Strength Index (RSI) has dropped to 48, declining sharply into negative territory, reflecting growing downside risks.The pair has lost its 20-day Simple Moving Average (SMA), confirming a deteriorating technical outlook. Further downside could target the 0.6250 region, where stronger demand might emerge. On the upside, resistance is seen around 0.6320, but a break above this level would be needed to shift sentiment toward recovery.