The Australian Dollar (AUD) strengthened during the American session on Wednesday (09/4), climbing to the mid-0.6100s as the US Dollar (USD) continued to weaken amid a risk-on rally in global markets. The currency pair rallied sharply after US President Donald Trump abruptly suspended most tariffs for 90 days, sparking a surge in equities and helping risk-sensitive currencies.

The minutes of the Federal Reserve's (Fed) March meeting, released during the session, revealed that policymakers were grappling with a "difficult compromise" due to persistent inflation pressures and a weakening growth outlook. From a technical perspective, AUD/USD remains tilted to the downside despite Wednesday's gains, as momentum indicators and moving averages continue to favor sellers.

Daily Market Movers Summary: US Dollar Holds Recovery After Fed Signals Caution

The US Dollar Index (DXY) held near the 103.00 area on Wednesday after a recent sharp decline, finding some stability following the release of the minutes of the Federal Reserve's March meeting. The minutes acknowledged an economic crossroads, highlighting that inflation risks could persist even as growth slows.

President Trump's unexpected move to halt most "reciprocal" and 10% tariffs for 90 days boosted market sentiment, lifting the Dow Jones above the 40,000 level in a historic surge. However, tariffs on China remained in place and were raised to 125% in response to Beijing's retaliatory 84% cut.

Fed officials were cautious, noting that uncertainties surrounding trade and inflation dynamics limit their ability to move quickly on interest rates. Richmond Fed's Barkin and St. Louis Fed's Musalem stressed that tariffs complicate the policy landscape and could delay future rate adjustments. Risk appetite has generally improved again as global investors cheered the temporary tariff relief. However, markets remain wary of ongoing trade tensions, especially given China's exclusion from the break. The AUD is benefiting from a weaker USD backdrop, but gains may be limited as trade disruptions weigh heavily on Australia's China-dependent export economy and support dovish RBA expectations. (Newsmaker23)

Source: FXstreet