Market Drivers And Recent Price Action
In US data, ISM Services PMI for March fell to 54.0 from 56.1, below the 54.9 forecast. The Prices Paid index jumped to 70.7, its highest level since 2022, linked to higher petrol prices. The US Dollar Index briefly moved above 100.00, then slipped 0.20% to 99.98. Attention now turns to US releases such as Durable Goods Orders, Fed speakers, FOMC minutes, GDP, Jobless Claims and inflation data. Australian markets reopen on 7 April after a four-day weekend. S&P Global Services PMI is expected to hold at 46.6, while the TD-MI inflation gauge is also due. An AFR poll of 38 economists showed most expect the RBA cash rate to rise to 4.35% for a third time this year. Westpac and Judo Bank forecast three more rises by June next year.Technical Levels And Trading Risks
Technically, support is near 0.6850 then 0.6800, with RSI at 44. Resistance is near 0.7020, then 0.7075–0.7120. We are seeing the Aussie dollar push higher towards 0.6920, but these gains are proving difficult to hold amid the geopolitical noise from Iran. This tension between a positive risk mood and underlying caution means we should expect choppy conditions. This push-and-pull is likely to define trading in the near term. On the Australian side, the market is pricing in a hawkish Reserve Bank of Australia, with the central bank having already delivered hikes this year to bring the cash rate to 4.35%. With the latest quarterly inflation data from late 2025 coming in at 4.1%, well above the RBA’s target, pressure remains for them to maintain a tough stance. This fundamental backdrop provides a floor for the currency for now. In the United States, the upcoming inflation data and Federal Reserve minutes are the main events we are watching. The recent spike in the ISM Prices Paid component to 70.7 suggests inflation could remain sticky, reinforcing what we’ve seen in the latest CPI data from early 2026 which showed inflation at 3.2%. The significant interest rate difference, with the Fed funds rate at 5.50%, still provides a strong incentive to hold US dollars. This environment of conflicting signals suggests using options to manage risk over the next few weeks. Given the potential for a sharp move on either the US inflation print or further Middle East headlines, buying volatility through strategies like straddles could be a sound approach. This allows traders to profit from a large price swing in either direction without having to predict the catalyst. We have seen this pattern before, as looking back to similar risk-off events in 2024 and 2025 shows the Aussie dollar often sells off quickly when global uncertainty spikes. Therefore, using options to protect against a break of the 0.6850 support level is critical. Any failure for the pair to push past the resistance near 0.7020 will be a key signal that this current rally is losing its strength. Create your live VT Markets account and start trading now.
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