• Australia's Westpac Consumer Confidence rebounded 2.2% in May after last month's 6% plunge,Is it worth putting 0 in ethereum in 2022 though remains below neutral levels at 92.1

• US-China tariff reduction agreement (145%→30% for US, 125%→10% for China) triggered USD strength across currency markets

• Market expectations shift from 2.85% to 3.1% for RBA's terminal rate this year, with 25bps cut still anticipated this month

The AUD/USD pair extended losses for a second session Tuesday, trading near 0.6370 despite the modest recovery in domestic consumer sentiment. The currency's sensitivity to China's economic health - Australia's largest trading partner - continues to drive volatility.

Technical indicators suggest further downside potential, with the pair trading below its 9-day EMA and RSI dipping under 50. Immediate support appears at the 50-day EMA (0.6344), while resistance sits at the psychological 0.6400 level.

Global Macroeconomic Crosscurrents

• US Treasury yields stabilize ahead of CPI data release, with DXY hovering near 101.60

• China's April trade surplus narrowed to $96.18B as export growth slowed to 8.1% YoY

• Fed maintains 4.25-4.50% rate band but expresses heightened inflation vigilance

The tariff reduction agreement between Washington and Beijing, while positive for global trade, has paradoxically weakened commodity-linked currencies like the AUD. Market participants appear to be pricing in reduced stimulus urgency from central banks as trade tensions ease.

Australia's manufacturing sector continues to struggle, with the Ai Group Index marking 33 consecutive months of contraction. This persistent weakness supports the case for RBA accommodation, though the scale of expected cuts has moderated slightly in recent sessions.

Technical Outlook and Key Levels

Chart analysis reveals the AUD/USD testing critical support zones. A sustained break below 0.6344 could open the door to March 2020 lows near 0.5914. Conversely, reclaiming the 9-day EMA at 0.6402 might allow a retest of December's 0.6515 peak.

Traders should monitor upcoming US inflation data and RBA policy signals for near-term directional cues. The currency's correlation with iron ore prices and broader risk sentiment remains elevated, suggesting continued volatility ahead.