AUD/USD attracts some dip-buyers to hold near 0.6400 in the Asian session on Wednesday. Hopes for a possible de-escalation in the US-China trade war boost investors' appetite for riskier assets and support the Aussie. Further, the pause in the US Dollar rebound also aids the pair's upside.
the Australian Dollar (AUD) lost some upside traction, sending AUD/USD back toward the 0.6370 region despite the earlier advance to the area of yearly peaks around 0.6440.

The late retracement in the pair came on the back of a pick-up in the buying interest around the US Dollar (USD) amid unabated jitters over the US–China tariff feud and renewed fears over the Fed's independence, which emerged as another source of concerns for market participants.

President Trump's recent decision to impose duties of 10 %–50 % across a wide range of imports—including a headline‑grabbing 145 % levy on select Chinese goods—has reignited fears of an all‑out trade war. Australia's heavy economic reliance on China leaves the Aussie especially vulnerable to each fresh salvo in Beijing and Washington's tariff exchange.

Central bank standoff
Both major central banks have signalled caution. In March, the Federal Reserve (Fed) held its policy rate at 4.25 %–4.50 %, with Chair Jerome Powell warning that anchoring inflation expectations remains the Fed's paramount task, even as higher tariffs threaten to trigger stagflation. He also stressed that price stability is the bedrock for sustainable job growth and hinted any future rate cuts will hinge on how inflation and growth evolve over time.

Meanwhile, the Reserve Bank of Australia (RBA) left its cash rate at 4.10 % earlier this month, with Governor Michele Bullock pointing to sticky inflation and a tight labour market as reasons to delay a rate cut. So far, investors currently see about a 70% chance of a rate reduction at the bank's May event.

Speculative bets remain in place
CFTC's positioning data revealed a pullback in bearish bets on the Aussie. Indeed, net short positions have fallen to a five‑week low near 59K contracts in the week ending April 15, accompanied by a decline in open interest.

Source; fxstreet