AUD/USD rose 0.56% on Thursday, extending gains to four sessions and nearing 0.7100, last seen in late March. It is above the 200-period exponential moving average near 0.6950 on the hourly chart, while Stochastic RSI is back above 80.
The move followed a two-week halt in US military operations against Iran, linked to Iran reopening the Strait of Hormuz. There is also uncertainty over whether Israel will halt operations in Lebanon, which was reported as part of Iran’s conditions.
Us Inflation Data In Focus
US February Personal Consumption Expenditures data came in above or in line with forecasts. Headline PCE was 2.8% year-on-year versus 2.6% expected, core PCE was 3.0% year-on-year, and both rose 0.4% month-on-month.
March US CPI is due at 12:30 GMT on Friday. FactSet forecasts headline CPI at 0.8% month-on-month and about 3.1%–3.3% year-on-year, with core CPI at 0.2%–0.3% month-on-month and 2.7% year-on-year.
On the daily chart, AUD/USD trades at 0.7084, above the 50-day EMA at 0.6967 and the 200-day EMA at 0.6752. Support levels cited include 0.7084, then 0.6967, and 0.6752, with Stochastic RSI around 57.
Looking back at the situation in April 2025 gives us a clear playbook for today. We saw how a fragile ceasefire created a temporary risk-on rally that lifted the Aussie dollar significantly. This pattern of geopolitical news overriding economic data for a short period is something we need to be prepared for again.
That ceasefire trade was a classic short-term opportunity, and we should view current lulls in global tensions similarly. Given this, we can use derivative markets to protect against sudden reversals by buying out-of-the-money AUD/USD put options. This provides a cheap hedge in case the calm breaks and the US Dollar’s safe-haven status returns with force.
Options And Volatility Strategy
The 2025 scenario showed markets ignoring hot inflation data in favor of geopolitics, but that never lasts. Just today, we learned that the March US Consumer Price Index (CPI) came in hotter than expected at 3.5% year-over-year, well above the Fed’s target. This tells us that sticky inflation remains the dominant economic theme, limiting how high risk currencies like the Aussie can run.
We should remember the warning about the CPI report being a double-edged sword. With major data releases, implied volatility often rises, making options strategies like long straddles or strangles attractive. This approach allows us to profit from a large price swing in AUD/USD, regardless of whether the direction is up or down.
The Aussie’s fundamental picture today is also different from that 2025 rally towards 0.7100. Iron ore prices, a key driver for the Australian economy, have recently fallen below $100 per tonne, a significant drop from last year’s levels. This fundamental weakness suggests that any AUD/USD rallies will likely face strong resistance and should be viewed with skepticism.
The technical analysis from last year correctly identified the 50-day moving average as a critical level for the trend. We should apply the same thinking today, using key moving averages to define our entry and exit points for trades. A sustained break below such a level would be our signal that a minor pullback is becoming a more significant downtrend.
