Australian Dollar Tumbles on China Port Fee EscalationThe Australian dollar plunged against all major currencies overnight following China's decision to impose port fees on shipping vessels, marking a significant escalation in ongoing trade tensions between the world's two largest economies. The move compounds pressure on the aussie after Friday's sharp 1.4% decline in AUD/USD triggered by Trump's initial tariff threats against China. While weekend assurances of cooperation had sparked a brief recovery to start the week, China's retaliatory port fee announcement sent the pair tumbling another 1% as the U.S. dollar captured safe-haven flows throughout the European trading session. The selling momentum reversed during the U.S. morning open, with improving risk sentiment and a rebound in equity markets providing relief for the battered commodity currency.
Technical indicators suggest AUD/USD may be approaching oversold territory after testing critical support levels. The pair touched 0.6450 at its weakest point around 6am EST, marking the first test of the 200-day moving average since May - a level that has historically provided significant support. Following the intraday reversal, AUD/USD now trades at the lower Bollinger Band (2 standard deviations on the 20-day), sitting precariously just above Friday's lows. Australian employment data due Wednesday night could provide near-term direction, while Federal Reserve speakers scheduled throughout the week may influence US dollar strength. However, the primary catalyst for major moves remains the unpredictable flow of trade-related headlines, with any commentary from Trump or Chinese officials capable of triggering sharp volatility in the Aussie.
