07.01.202514:05 Forex Analysis & Reviews: AUD/USD: Analysis and Forecast

The AUD/USD pair has been attracting buyers for the fourth consecutive day amid modest weakness in the U.S. dollar. The U.S. Dollar Index, which tracks the dollar against a basket of currencies, is hovering near the weekly low reached on Monday.

This is linked to uncertainty surrounding President-elect Donald Trump's tariff policies. While reports suggested his team was considering tariffs only for critical sectors vital to U.S. national or economic security, Trump denied this information in a post on his platform, Truth Social. This ambiguity keeps dollar bulls on the defensive, providing a tailwind for the AUD/USD pair.

However, the pair's further growth may be capped by concerns over a potential trade war between the U.S. and China, as well as the Reserve Bank of Australia's dovish stance. The Federal Reserve has adopted a more hawkish tone, signaling a higher likelihood of slowing the pace of rate cuts in 2025. This supports U.S. Treasury yields and could bolster the dollar going forward.

The current dollar weakness may support the AUD/USD pair temporarily. However, sustained growth could face resistance as ongoing geopolitical risks, including U.S.-China tensions, increase demand for safe-haven assets like the U.S. dollar.

Investors are advised to stay on the sidelines ahead of the Federal Open Market Committee (FOMC) minutes and the U.S. Nonfarm Payrolls (NFP) report, scheduled for Wednesday and Friday, respectively.

From a technical perspective, oscillators on the daily chart remain in negative territory, and exponential moving averages suggest that buying momentum has yet to strengthen. This reinforces the fundamental outlook and advises caution for bulls in the AUD/USD pair.