AUD/USD retreats as risk-off mood builds ahead of Trump's tariff deadline

• AUD/USD retreats amid renewed demand for safe havens ahead of Trump's tariff deadline.
• AUD pressured by RBA cut expectations, while steady Fed policy underpins USD.
• AUD/USD holds a bullish structure, though momentum fades near wedge resistance.

The Australian Dollar (AUD) weakened against the US Dollar (USD) on Friday amid a low-volume trading session and a risk-off tone ahead of US President Donald Trump's July 9 tariff deadline.

At the time of writing, AUD/USD is hovering above 0.6550, with intraday losses of 0.30%.

The closure of US financial markets for Independence Day led to lighter trading volumes, resulting in subdued volatility and a more corrective tone across currency markets.

Adding to the bearish bias was weaker-than-expected Australian trade data. Figures released on Thursday showed a 2.7% decline in exports for May, resulting in a narrower trade surplus.

A risk-off tone was visible on Friday ahead of President Trump's July 9 tariff deadline.

Trump's threat to impose tariffs of 10% to 70% on multiple countries and dictate trade terms has reignited global trade fears, prompting safe-haven flows and pressuring risk-sensitive currencies.

At the same time, expectations are mounting that the Reserve Bank of Australia (RBA) will continue easing monetary policy.

According to a Reuters survey released on Friday, a strong majority of 31 out of 37 economists expect the central bank to implement a third consecutive 25-basis-point rate cut on Tuesday. This would bring the official cash rate down to 3.60%.

This anticipated move reflects the RBA's response to moderating inflation and a slowing domestic economy. Meanwhile, the Federal Reserve (Fed) has maintained interest rates within the 4.25% to 4.50% range, providing some support to the US Dollar.

AUD/USD technical levels to watch

From a technical perspective, AUD/USD remains within the confines of a rising wedge pattern on the daily chart, a structure that often signals potential trend exhaustion. Recent price action has struggled to breach the 0.6590 level, with multiple failed attempts to clear this barrier just beneath the key psychological resistance at 0.6600. This hesitation has led to a mild pullback, reflecting market indecision as bullish momentum starts to fade.

Despite the pullback, the broader trend remains constructive. The pair continues to trade above both the 50-day Exponential Moving Average (EMA), currently at 0.6471, and the 200-day EMA at 0.6436. This highlights the underlying bullish structure and suggests that buyers remain in control on a medium-term basis.

AUD/USD daily chart

Momentum indicators, however, are starting to show early signs of fatigue. The Relative Strength Index (RSI) has eased to around 56, down from prior highs, indicating weakening momentum while still holding above the neutral 50 level. This suggests that the bullish bias is still intact, but momentum is softening.

A confirmed breakout above 0.6600 could trigger renewed upside, potentially opening the door to the 78.6% Fibonacci retracement of the September-April decline at 0.6722.

On the downside, a rejection at current levels may lead to a deeper pullback, with initial support seen at the 61.8% Fibonacci level near 0.6550. This may be followed by stronger support near the 50% retracement at 0.6428, which closely aligns with the 200-day EMA, adding to its technical significance.