AUD/USD slides as Trump escalates Iran conflict, boosting USD and oil

AUD/USD pressured as risk-on sentiment strengthens the US Dollar.
President Trump signals weeks of further fighting with Iran, no talks expected.
Oil surges near $110, while stocks, bonds, and Gold tumble.

Agustin Wazne FXStreet

The AUD/USD fell to near the 0.6890 price region on Thursday, as markets turned sour amid escalating Middle East fighting and a surge in the safe-haven US Dollar (USD).

United States (US) President Donald Trump addressed the nation, warning that the US would intensify its military campaign against Iran, signaling that two to three more weeks of fighting are likely. He ruled out immediate negotiations, while separate reports suggest Iran is also unwilling to engage diplomatically. Trump added that the Strait of Hormuz would “naturally reopen” after the conflict, while Tehran maintained that control of the Strait remains in its hands alongside Oman.

Markets reacted aggressively to the escalation. Oil prices surged toward $111 per barrel, reflecting fears of prolonged supply disruptions tied to the ongoing closure of the Strait of Hormuz. At the same time, stocks, bonds, and Gold declined, highlighting a broad liquidation across asset classes as investors repositioned amid uncertainty.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.6891. The near-term bias turns mildly bullish after the pair rebounded from the 0.6860 area and now holds just above clustered support and the rising 20-period Simple Moving Average (SMA) around 0.6889, while the 100-period SMA near 0.6995 remains well above price and frames a broader downtrend. Momentum has improved as the Relative Strength Index (RSI) lifts toward 48 after recovering from sub-30 readings earlier in the sequence, indicating fading bearish pressure and scope for an extension of the current bounce while above the short-term average.

Immediate support is seen at 0.6886, aligned with the 20-period SMA, followed by 0.6866 and then 0.6859, where recent lows define a key downside shelf for the current recovery structure. On the topside, initial resistance stands at 0.6897, with a clear break opening the way toward the 0.6920 consolidation area from prior sessions. A sustained move above that zone would strengthen the bullish bias, while a drop back through 0.6866 would undermine it and expose the lower support band.

(The technical analysis of this story was written with the help of an AI tool.)

Author

Agustin Wazne

FXStreet

Agustin Wazne joined FXStreet as a Junior News Editor, focusing on Commodities and covering Majors.

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