AUD/USD rises to YTD high as Trump pressures Powell to cut rates, US Dollar falls

• AUD/USD rises to its highest level since last November as bullish momentum builds.
• Improved risk sentiment continued to support demand for risk-sensitive currencies such as the Australian Dollar.
• President Trump and Fed Chair Powell clash over rates, raising concerns over Fed independence.

The Australian Dollar (AUD) is extending its gains against the US Dollar (USD) and hit a year-to-date high as the greenback weakens and global risk appetite improves. 

At the time of writing, renewed optimism in financial markets is supporting demand for risk-sensitive assets, with AUD/USD holding firm above the 0.6500 level after reaching 0.6564, its highest level since November.

US President Donald Trump has publicly pushed for a faster easing of monetary policy to support growth. Meanwhile, the Chairman of the Federal Reserve (Fed), Jerome Powell, has signaled a more cautious approach, citing the need for clearer inflation data. 

While Friday's Personal Consumption Expenditure (PCE) data, the Fed's preferred measure of inflation, may provide a clearer picture of the latest inflation trends, Powell has argued that the risks posed by tariffs to inflation will likely only be reflected in later reports.

The Fed's reluctance to cut interest rates has been publicly criticized by Trump, who has already named potential candidates to replace Powell, whose official term is set to end in May 2026.

The dispute has raised fresh concerns about the central bank's independence, prompting a reassessment of the US monetary policy outlook. This has also resulted in analysts pricing in more aggressive rate cuts in the last quarter of the year, which has pushed US Treasury yields lower.

At the same time, a de-escalation in Middle East tensions has reduced demand for safe-haven flows, boosting risk-sensitive currencies like the Australian Dollar. Supportive commodity trade with China and stable guidance from the Reserve Bank of Australia have further underpinned AUD/USD. 

AUD/USD tests wedge resistance as bulls target 0.6600 resistance

AUD/USD is currently testing the upper boundary of a rising wedge pattern on the daily chart, as prices edge above the 61.8% Fibonacci retracement of the September-April decline, offering immediate support near 0.6550. 

Thursday's high at 0.6564 marks the next level of resistance, aligning closely with wedge trendline resistance. A decisive break above this zone could pave the way for a retest of the key psychological level at 0.6600. 

AUD/USD daily chart

Beyond that, bulls may target the November swing high at 0.6688, followed by the 78.6% Fibonacci retracement at 0.6722. 

Despite the bullish tone, price action remains within the wedge structure, with support reinforced by the 50-day and 200-day Exponential Moving Averages (EMA) at 0.6455 and 0.6427, respectively. The Relative Strength Index at 60 reflects steady upward momentum without signaling overbought conditions, though a rejection at resistance could trigger a pullback toward 0.6500 or deeper support at 0.6450.