• AUD/USD rises to the monthly high around 0.6300 as Trump threatens lower tariffs on China than feared.
• The USD Index bounces back after refreshing a two-week low near 107.75.
• Investors await the flash US S&P Global PMI data for January

The AUD/USD pair revisits the monthly high around 0.6300 in Wednesday’s North American session. The Aussie pair ticks higher as the Australian Dollar (AUD) gains on reports that United States (US) President Donald Trump threatens to raise 10% tariffs on China from February 1.

The amount of tariff hikes proposed by Trump is significantly lower than what market participants had anticipated. In the election campaign, Trump said that he would impose 60% tariffs on China if he won the elections. Any economic development in China significantly impacts the Australian dollar, given that Australia is China's leading trading partner.

Meanwhile, the US Dollar (USD) recovers its intraday losses after posting a fresh two-year high, with the US Dollar Index (DXY) rebounds from 107.75.

Going forward, investors will focus on the preliminary US S&P Global Purchasing Managers’ Index (PMI) data for January, which will be published on Friday.

AUD/USD bounces back from a more-than-four-year low of 0.6170. The pair rebounded after a divergence in momentum and price action. The 14-period Relative Strength Index (RSI) formed a higher low, while the pair made lower lows on a four-hour timeframe.

The asset has recovered to near the 200-period Exponential Moving Average (EMA) near 0.6300. The 20-day EMA slopes higher near 0.6247, suggesting that the near-term trend has turned bullish.

Going forward, a sustenance move above 0.6300 will open doors to the December 18 high of 0.6340 and the round-level resistance of 0.6400.

On the flip side, the pair would face more downside if it fails to hold the January 13 low of 0.6131. This will push it lower to the round-level support of 0.6100 and the April 2020 low of 0.5990.
 

AUD/USD four-hour chart

(Click on image to enlarge)

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