The AUD/USD pair experienced a decrease of 0.22% during early European trading on Friday, settling near 0.7035. This decline is attributed to a rebound in the US Dollar (USD), backed by recent geopolitical developments involving Iran and the United States. Iranian officials denied reports of an agreement on a Memorandum of Understanding (MoU) with the US, a claim previously asserted by President Donald Trump, citing support from Tehran’s leadership.
At the same time, the US Dollar Index (DXY), which reflects the dollar’s performance against six major currencies, increased by 0.15%, reaching approximately 99.85. On Thursday, President Trump announced the cancellation of planned attacks on Iran and stated that discussions regarding a peace deal had been approved by all involved parties, albeit the US naval blockade on Iranian ports would continue until the agreement is finalized.
In Australian markets, the Australian Dollar (AUD) is adopting a cautious stance in light of the upcoming Reserve Bank of Australia (RBA) monetary policy announcement scheduled for Tuesday. A recent Reuters poll suggests that the RBA is set to pause its monetary tightening cycle, maintaining the Official Cash Rate (OCR) at 4.35%. So far this year, the RBA has increased its OCR by 75 basis points.
From a technical perspective, the AUD/USD pair is displaying a bearish short-term trend as it trades below key levels. The 20-day exponential moving average (EMA) sits at 0.7103, and the 50% Fibonacci retracement level is positioned at 0.7054. Currently, the pair hovers just above the 61.8% Fibonacci retracement at 0.7002. The Relative Strength Index (RSI) indicates weak, though not extreme, selling pressure, registering around 39 after a dip from the mid-0.72 range.
Looking ahead, initial support for the AUD/USD appears at the 61.8% Fibonacci level of 0.7002, followed by further support at the 78.6% retracement level of 0.6929 and the swing low anchor at the 100% retracement of 0.6834. On the upside, a rebound in the pair would require breaking through the 50% Fibonacci retracement at 0.7054, with a robust resistance zone found at the 20-day EMA of 0.7103 and the 38.2% retracement at 0.7106. For more significant bullish momentum, the pair would need to push beyond the 23.6% level of 0.7171 and approach the recent cycle high near 0.7274.
