The AUD/USD pair rises to near 0.6300 as the US Dollar (USD) slides due to an uncertain United States (US) economic outlook. The pair benefits from a softer Greenback as investors focus on upcoming inflation data, which could influence Federal Reserve (Fed) policy expectations. However, persistent concerns over trade tensions and global growth continue to cap upside potential for AUD/USD.
Australian Dollar strengthens as US Dollar declines
The US Dollar Index (DXY) fell to new multi-month lows near 103.20, pressured by declining bond yields and speculation about a potential US economic slowdown. Market participants are focused on upcoming data releases, including inflation figures, MBA Mortgage Applications, and the EIA's crude oil inventory report.
Market caution surrounding trade policies and economic recession risks in the US kept gains in check. AUD/USD fluctuated around the 0.6280-0.6270 zone, while the US Dollar Index hovered near 103.30, marking its weakest level since early October.
Commodity markets provided limited support for the Aussie. Copper and iron ore prices attempted to recover after recent declines, though concerns over slowing global demand kept gains subdued.
Trade negotiations between the US and Canada remain in focus. Ontario Prime Minister Doug Ford agreed to suspend planned electricity export tariffs following emergency discussions with US officials. The move comes after US President Donald Trump threatened a 50% tariff on Canadian steel and aluminum, further escalating trade tensions.
Investors are closely watching US inflation data, which is expected to be a key factor in shaping Federal Reserve policy expectations. A higher-than-expected CPI reading could reinforce the case for a prolonged period of restrictive monetary policy.

Source: Fxstreet