AUD/USD rallies to multi-month high as US dollar weakens

AUD/USD soars amid continued US asset exodus

The Australian dollar (AUD) finished significantly higher last week at 0.6376, marking a 1.36% increase and extending its recovery from the five-year low of 0.5914 recorded two weeks prior.

The 'Aussie Battlers's' gains occurred against a backdrop of broad softening in the United States (US) dollar (USD) against most currencies. Exacerbated by escalating trade tensions, unpredictable policy shifts, and concerns over a policy-induced recession in the US. These factors have severely undermined foreign investor confidence in US assets.

US dollar weakness persists amid Trump-Powell tensions

Investor confidence continues to erode early this week, exacerbated by President Trump's recent discussions regarding potentially dismissing Federal Reserve (Fed) Chairman Jerome Powell due to disagreements over interest rate policies. Despite Powell being appointed by Trump in 2017, tensions have escalated significantly, with Trump openly criticising Powell’s monetary policy decisions.

Trump’s criticisms include accusations of 'bad decisions' and being consistently 'too late and wrong,' while Powell has warned publicly that Trump's tariff policies risk higher inflation and slower economic growth, challenging Trump’s claims of economic benefit.

Legal uncertainty surrounds the possibility of Trump's dismissal of Powell, but the public contention itself raises serious doubts about the Fed's independence and its capacity to effectively manage its dual mandate of achieving maximum employment and stable prices.

Market sentiment increasingly cautious

Even if President Trump curtails his criticism, the administration’s recent public disputes with the Fed have likely already prompted sufficient investor unease, driving an ongoing retreat from US dollar holdings toward more stable investments, including the Australian dollar.

Continued public discord between Trump and Powell may accelerate this exodus, further benefiting the AUD/USD pair in the short to medium term.

AUD/USD technical analysis

After forming a five-wave 'ABCDE' triangle correction in early April, AUD/USD dropped sharply to reach a cycle low of 0.5914. As noted in recent analysis, the subsequent rally from this low created a potential V-shaped bottom, a technical pattern commonly associated with medium-term reversals.

A sustained break above the 200-day moving average (MA) at 0.6474 would confirm the completion of this reversal pattern, signalling a potential rally toward the 200-week MA near 0.6770.

AUD/USD daily chart

• _{Source: TradingView. The figures stated are as of 22 April 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}