AUD/USD holds around 0.6950 as geopolitical factors boost demand for the USD

Australian Dollar Edges Up Slightly After Previous Losses

The Australian Dollar opened Thursday with a modest increase of 0.04%, following a 0.68% decline on Wednesday as the US Dollar strengthened broadly, even as market sentiment improved. At this moment, AUD/USD is trading at 0.6950.

AUD Recovers Some Ground After Easing Inflation, But US Dollar Strength Caps Gains

Global financial markets remain unsettled as geopolitical developments, particularly news surrounding the US-Iran conflict, continue to influence investor sentiment. Recent speculation about potential US-Iran negotiations to resolve the Middle East crisis has driven up US stock prices, the US Dollar, and gold, while yields on US Treasury bonds have dropped.

Australia’s inflation figures for February showed little change, offering some relief to local households. The annual Consumer Price Index (CPI) eased slightly from 3.8% to 3.7%, though it remains above the Reserve Bank of Australia’s 3% target.

The trimmed mean CPI held steady at 3.3% year-over-year, matching January’s revised figure.

It is important to note that these inflation readings were recorded before the recent Middle East turmoil, which has since driven up global energy prices and increased inflation risks worldwide.

Recently, RBA Assistant Governor Christopher Kent commented that the Iran conflict has tightened financial conditions and introduced new inflationary pressures. He emphasized that while central banks cannot prevent initial price shocks, they can work to ensure these do not translate into persistent inflation or higher long-term expectations.

Last week, the RBA raised its benchmark rate to 4.1% in a closely split decision. According to Governor Bullock, the move was influenced more by timing considerations than a shift in policy direction.

Meanwhile in the US, Federal Reserve Governor Stephen Miran maintained a dovish stance, noting that inflation has not posed significant challenges and that the labor market has shown signs of ongoing weakness. Miran suggested that the Fed should move rates closer to neutral within the year.

AUD/USD Technical Analysis and Outlook

On the daily chart, AUD/USD is currently at 0.6942. The short-term outlook has turned slightly negative after the pair fell below a cluster of recent rising closes and retreated from the 0.7150 region. The price is now trading beneath the former support zone near 0.7000 and has slipped below the upward-sloping moving averages, signaling that bullish momentum is waning. The RSI has dropped from the 60 level to the low 40s, indicating growing downward pressure rather than an oversold condition.

• Resistance: The first resistance level is near the previous support at 0.7000, where the broken trend line and nearby moving averages may limit rebounds. Further resistance lies at recent highs around 0.7080 and 0.7120.
• Support: Immediate support is found near 0.6900, just above the broader ascending trend from 0.6673. A break below this area could open the door to further declines toward 0.6800.

A daily close above 0.7000 would help alleviate the current bearish bias, but failure to reclaim this level keeps the focus on lower support zones as sellers continue to drive the correction.

(This technical analysis was created with the assistance of AI tools.)