The Australian Dollar rose against the US Dollar on Tuesday as the US Dollar weakened ahead of a deadline set by US President Donald Trump for Iran to reach a deal or reopen the Strait of Hormuz by 8:00 p.m. Eastern Time (00:00 GMT on Wednesday). AUD/USD traded near 0.6955, up about 0.54%, while the US Dollar Index (DXY) was around 99.80 after failing to hold above 100.
The AUD also gained support from a firmer Chinese Yuan after the People’s Bank of China set its daily reference rate at 6.8854, the strongest in nearly three years. The AUD often moves in line with China-related developments due to Australia’s trade links with China.
Audusd Tests Key Resistance
On the daily chart, AUD/USD rebounded after holding above the 100-day Simple Moving Average at 0.6842. The pair is testing 0.6950, which has shifted from support to near-term resistance.
A move above 0.6950 could target the 0.7000 level and the 50-day SMA at 0.7024. Support remains near the 100-day SMA, and a daily close below it could point to 0.6700.
The RSI has moved back towards 50. The MACD remains below its signal line but is rising towards zero, and the histogram is narrowing.
We recall a similar dynamic back in 2025 when fragile sentiment over a US-Iran deadline weakened the dollar. That situation provided a clear playbook for how geopolitical stress can create opportunities in the AUD/USD pair. This pattern of a softening greenback during times of uncertainty appears to be re-emerging.
Trade Talks Add Market Fragility
Currently, renewed discussions around US-EU trade tariffs are creating similar fragility in the market. The US Dollar Index has consequently dipped 1.2% over the last two weeks, struggling to hold its ground around the 101.50 mark. This is putting broad-based upward pressure on other major currencies, including the Aussie dollar.
The Australian dollar’s strength is further supported by positive economic data from China. China’s latest report showed first-quarter GDP growth of 5.1%, beating expectations and reinforcing demand for Australian commodities. We’ve seen iron ore prices climb over 8% in the past month alone, directly benefiting Australian export values.
Given this backdrop, traders should consider positioning for further upside in AUD/USD. Buying call options with a strike price around 0.7150 could be a viable strategy to capture potential gains in the coming weeks. This allows for participation in the rally while limiting downside risk to the premium paid.
To manage risk, we should look at key support levels for placing protective put options. The 100-day simple moving average, now sitting near 0.6920, serves as a solid technical floor. A break below this level would signal a significant shift in momentum and a reason to exit bullish positions.
Current technical indicators support this positive outlook, unlike the mixed signals we saw in 2025. The Relative Strength Index is pushing above 60, indicating strong buying momentum is building. Furthermore, the MACD shows a clear bullish crossover, suggesting the uptrend has room to run.
