The Australian dollar (AUD) continued its rally on Thursday (10/4), climbing towards the 0.6240 zone during the American session. The currency pair built on its recent strength as the US Dollar Index (DXY) slumped further towards multi-month lows near the 101 area. The move came after the market digested the White House's confirmation of a 145% tariff on Chinese goods, combined with the Federal Reserve's (Fed) cautious tone.

Despite the greenback's decline, the technical backdrop for AUD/USD remains tilted to the downside, with several key indicators continuing to flash bearish signals, even as the pair attempts to recover lost ground.

Daily market movers: Aussie up as US dollar slides as Fed flags inflation, trade war risks

The US dollar (USD) continued its decline on Thursday, pressured by escalating trade tensions and weaker inflation data. DXY eased near the 101.00 level as investors digested the latest tariff developments and cautious Fed rhetoric.

President Trump's 145% tariffs on Chinese imports remain in place, although there was a temporary pause on some measures. Fed officials, including Goolsbee, Logan, and Schmid, warned that price pressures caused by the tariffs could hurt consumer sentiment, dampen job growth, and complicate monetary policy decisions.

US initial jobless claims rose slightly, reinforcing concerns about a cooling labor market. Meanwhile, the March CPI report revealed a sharp slowdown in both core and headline inflation, easing to multi-year lows.

Equity markets gave back some of Wednesday's gains, with the Dow falling below 40,000 as sentiment turned more cautious. Meanwhile, Gold surged to an all-time high and WTI crude reversed midweek gains amid demand concerns. The Australian dollar strengthened against a weaker US dollar, even as the macro outlook for Australia remains fragile due to its reliance on Chinese demand, which has been dampened by retaliatory tariffs. (Newsmaker23)

Source: FXstreet