AUD/USD Risk Alert: Aussie Dollar Battles 0.7075 as Trump’s Global Tariff “Plan B” Ignites Market Panic
The Australian Dollar is at the center of a geopolitical firestorm. As of February 23, 2026, the AUD/USD pair is struggling to maintain...
Quick overview
- The Australian Dollar (AUD) is facing challenges as it hovers around 0.7075 amid a global trade crisis triggered by a new 15% tariff imposed by the U.S.
- U.S. President Trump implemented the tariff to bypass a Supreme Court ruling, prompting Australian Trade Minister Don Farrell to consider WTO disputes.
- Despite trade tensions, the Reserve Bank of Australia maintains a hawkish stance, contrasting with the dovish outlook of the U.S. Federal Reserve.
- Technical analysis suggests that AUD/USD could rise towards 0.7500 if the Fed cuts rates while the RBA continues tightening, with key support at 0.7030.
The Australian Dollar is at the center of a geopolitical firestorm. As of February 23, 2026, the AUD/USD pair is struggling to maintain its footing near 0.7075, following a weekend of unprecedented legal and economic drama in Washington. While the Aussie has shown resilience throughout early 2026, the sudden shift from targeted trade measures to a 15% blanket global tariff has sent shockwaves through risk-sensitive markets.
The “Plan B” Surcharge: Trump Sidesteps Supreme Court with 15% Levy
In a move that caught global trade ministers off guard, U.S. President Donald Trump invoked Section 122 of the Trade Act of 1974 to implement a 15% temporary global tariff on all imports.
This drastic action comes less than 24 hours after the U.S. Supreme Court struck down previous broad tariffs under the International Emergency Economic Powers Act (IEEPA). By pivoting to Section 122—designed to protect against “extraordinary balance of payments deficits”—the administration has bypassed the court, though the levy is currently capped at 150 days.
- Australian Reaction: Trade Minister Don Farrell has labeled the move “unjustified” and is currently in Washington to “examine all options,” including potential WTO disputes.
- Commodity Hit: As a major exporter of iron ore and LNG, Australia faces a significant competitive disadvantage if these costs are passed down the supply chain.
RBA vs. Fed: The 2026 Policy Divergence
Despite the trade headwinds, the Reserve Bank of Australia (RBA) remains the “Hawkish Outlier” of the G10. While the Federal Reserve is under pressure to cut rates due to cooling U.S. GDP and employment uncertainty, the RBA has doubled down on its tightening cycle.
| Central Bank | Recent Action | Outlook for 2026 |
| RBA | Hiked to 3.85% (Feb 3) | Markets price a 50% chance of another hike by May. |
| U.S. Fed | Hold at 3.625% | Dovish Shift: At least two 25bps cuts expected by year-end. |
This widening interest rate gap is provide a “policy floor” for the Aussie Dollar. If the Fed follows through with cuts while Governor Michele Bullock maintains a tightening bias, the yield spread could propel AUD/USD toward 0.7500 once the initial tariff panic subsides.
AUD/USD Technical Forecast: The $0.7030 “Line in the Sand”
The technical structure for AUD/USD remains surprisingly constructive despite the “noisy” trading session. The pair is currently defending a rising trendline from the January lows.
- Support Zone ($0.7030 – $0.7040): This is the “Bulls’ Last Stand.” As long as AUD/USD holds above the 50-period Moving Average ($0.7028), the medium-term uptrend remains intact.
- Resistance Barrier ($0.7145): A sustained daily close above the February 2023 high of 0.7157 would signal a “massive breakout,” opening the door to 0.7280.
The Week Ahead: All Eyes on CPI
While Washington headlines will dominate the ticker, the “Aussie” faces its own domestic hurdle on Wednesday, February 25, with the release of the January Monthly CPI. If inflation remains “sticky” above 3.4%, expect the RBA to reinforce its hawkish tone, potentially sparking a short-squeeze in the AUD.
Trade Idea: Consider buying the dip near 0.7040 with a tight stop below 0.6985, targeting a retest of 0.7185 on any signs of trade-tension de-escalation.
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