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Australian Dollar tests six-week low as Trump rattles markets

  • Trump’s Iran retaliation threat drives investors toward safer assets.
  • US small-business confidence weakens as price-hike plans persist.
  • NAB drops August RBA hike call after sentiment deteriorates.

The Aussie Dollar edges lower, some 0.25% against the Greenback on Tuesday as the market mood turned sour due to Trump's threats to retaliate against Iran after a helicopter was downed in the Strait of Hormuz. The AUD/USD trades at 0.7027 after testing a six-week low of 0.7005.

AUD/USD weakens as geopolitical stress and CPI caution dominate

Market mood is downbeat as developments in the Middle East have opened the door for an escalation of Trump’s vow for a response against an Iranian attack. The US President Trump revealed that the US Central Command launched strikes on Iran on Tuesday, as retaliation, he posted on his social media.

Oil prices, despite recovering, ended the session with losses, with WTI down almost 3%, while the Greenback trimmed some of its earlier losses, ending almost flat, according to the US Dollar Index (DXY).

The US economic docket showed the NFIB Small Business Optimism Index fell to 95.3, below the 52-year average of 98.0, indicating that companies are less optimistic about the economic outlook. The survey showed that 34% of businesses polled plan to raise prices in three months. Regarding the labour market, small businesses dropped their hiring plans, with shortages persisting in sectors such as agriculture and wholesale trade.

Eyes turn to the release of the US Consumer Price Index (CPI) for May on Wednesday, which could offer hints of the impact of the US-Iran war on inflation.

A Reuters poll found that most economists expect the Federal Reserve to keep rates unchanged for the rest of the year. Almost 70% of the 102 economists forecast the Fed Funds rate to end at the 3.50%-3.75% range. Money markets had priced in 22 basis points of rate hikes towards the end of the year.

Some Federal Open Market Committee members have already floated the possibility that rates may need to rise later this year.

In Australia, consumer sentiment declined again in June due to inflation and rising gasoline costs affecting family budgets. Business conditions steadied in May, according to the National Australia Bank (NAB) survey.

Economists at NAB revised their expectations for further Reserve Bank of Australia (RBA) tightening, following three rate hikes this year. “We no longer expect the RBA to hike by 25bp in August and now see the cash rate peaking at the current rate of 4.35%,” said Sally Auld, NAB Chief Economist.

AUD/USD Price Forecast: Technical outlook

Chart Analysis AUD/USD
AUD/USD daily chart

In the daily chart, AUD/USD trades at 0.7024, extending a bearish near-term bias as spot holds below the clustered 50-, 100- and 200-day Simple Moving Averages (SMAs) around 0.7132. The pair is sliding along a sequence of rising support trend lines, suggesting the broader uptrend is being tested, while the Relative Strength Index (14) near 36 hints at building downside momentum without yet reaching oversold territory.

On the topside, initial resistance is located at the 50/100/200-day SMA cluster near 0.7132, with the broader downward resistance trend line above it reinforcing the cap on rallies. On the downside, successive upward support trend lines traced from 0.6833 and 0.6897 underpin the pair, leaving the immediate focus on whether buyers can defend these rising floors to prevent a deeper retracement within the broader bullish structure.

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

Australian Dollar Price Today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHF
USD-0.03%-0.23%0.11%-0.01%0.29%-0.14%0.06%
EUR0.03%-0.17%0.17%0.02%0.38%-0.08%0.14%
GBP0.23%0.17%0.34%0.20%0.52%0.10%0.31%
JPY-0.11%-0.17%-0.34%-0.14%0.18%-0.25%-0.05%
CAD0.01%-0.02%-0.20%0.14%0.32%-0.09%0.11%
AUD-0.29%-0.38%-0.52%-0.18%-0.32%-0.42%-0.21%
NZD0.14%0.08%-0.10%0.25%0.09%0.42%0.21%
CHF-0.06%-0.14%-0.31%0.05%-0.11%0.21%-0.21%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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