AUD/USD snaps five-session slide as Iran peace hopes lift risk appetite
- The White House signaled a willingness to halt Iran operations, triggering a broad risk-on rally across equities and currencies.
- Wednesday's ADP payrolls, retail sales, and ISM Manufacturing PMI headline a packed US data calendar mid-week.
- AUD/USD bounced 0.69% on Tuesday to close around 0.6900, snapping a five-session losing streak on a surge in risk appetite.
AUD/USD rallied 0.69% on Tuesday, snapping a five-day losing streak to close around 0.6900 after bouncing sharply from a session low near 0.6830. The gain was the pair's strongest single-day move in over a week, but price stalled well short of the sticky 0.7000 round number that has capped rallies throughout March. Tuesday's candle printed a long lower wick, pointing to solid dip-buying interest, though the pair is still deep inside a broader pullback from the February highs close to 0.7190.
The rally was driven by a wave of risk appetite after reports emerged that the White House is prepared to halt military operations against Iran, sparking hopes of a diplomatic resolution to the five-week-old conflict. The S&P 500 jumped 2.3% in its best session since the war began, and the risk-sensitive Australian Dollar rode the optimism higher after weeks of pressure from surging energy costs and growth fears. The Reserve Bank of Australia (RBA) hiked rates for a second straight month to 4.10% in March, citing renewed inflation pressures partly driven by the Middle East energy shock, and RBA Assistant Governor Christopher Kent warned on Tuesday that a prolonged conflict could push short-run neutral rates higher and force an even more restrictive policy stance.
On the US Dollar side, the Federal Reserve held the federal funds rate at 3.50% to 3.75% in March, with Chair Jerome Powell citing elevated uncertainty from the conflict. Tuesday's US data leaned soft; the Chicago Purchasing Managers Index (PMI) fell to 52.8 against a consensus of 55, while the Job Openings and Labor Turnover Survey (JOLTS) dipped to 6.88 million versus 6.92 million expected. Wednesday brings a heavy slate, with the ADP Employment Change (40K consensus), February retail sales (0.5% MoM consensus), and the Institute for Supply Management (ISM) Manufacturing PMI (52.5 consensus) all in focus. Friday's Non-Farm Payrolls (NFP) report (60K consensus) lands on Good Friday, when thin holiday liquidity could amplify any surprise.
AUD/USD 5-minute chart
Technical Analysis
In the 5-minute chart, AUD/USD trades at 0.6900. The near-term bias is mildly bullish as price holds a steady advance above the rising 200-period exponential moving average, which now tracks near 0.6876 and underpins the recent series of higher closes. However, momentum has cooled, with Stochastic RSI sliding from overbought extremes above 80 toward the mid-range, signalling fading upside pressure and a risk of consolidation rather than an immediate extension higher.
Initial support emerges at 0.6895, guarding a deeper pullback toward 0.6885 and the stronger 0.6875/0.6870 zone, where the 200-period EMA reinforces intraday demand. As long as the pair holds above this cluster, buyers may attempt another push toward initial resistance at 0.6905, followed by 0.6915 and 0.6925. A sustained break below 0.6870 would negate the bullish bias and expose 0.6855 as the next downside target.
In the daily chart, AUD/USD trades at 0.6900. The pair holds above the rising 200-day EMA near 0.67 while trading roughly in line with the flattening 50-day EMA around 0.70, keeping the broader structure in a modestly bullish bias despite the recent pullback. Price has eased from the 0.71–0.72 region, but the retreat remains shallow relative to the prior advance, and there is no clear topping pattern. The Stochastic RSI stays depressed below 20, signalling waning downside momentum rather than strong follow-through selling at current levels.
Initial resistance emerges at 0.7020, with a break there exposing the recent swing highs at 0.7075 and then the 0.7120/0.7150 area, where prior peaks cluster. On the downside, immediate support sits at 0.6880, followed by 0.6850, while stronger buying interest is expected toward the 0.6800 region, which lies safely above the 200-day EMA and underpins the medium-term uptrend. A daily close below 0.6800 would weaken the bullish bias and open the way toward 0.6750, whereas holding above this zone keeps scope for another test of the 0.71 handle in the near term.
(The technical analysis of this story was written with the help of an AI tool.)
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
Author
Joshua Gibson
FXStreet
Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.
