AUD/USD rose towards 0.7140 on Friday as the US Dollar weakened and risk appetite improved. The move came despite ongoing Middle East tension, which has helped push Oil prices higher.
This week’s US data was firm, but the Dollar eased as markets took profit after recent gains. US yields slipped modestly, which added pressure on the Dollar and supported the Australian Dollar.
Market focus has shifted away from only safe-haven demand towards steadier sentiment. This has allowed risk-linked currencies such as the Aussie to recover.
On the four-hour chart, AUD/USD trades near 0.7140 and is consolidating around that level. Price is above the 100-period SMA at 0.7075 but below the 20-period SMA at 0.7149.
The RSI (14) is 47.3, close to the midpoint, which points to range trading. Resistance sits at 0.7149 and 0.7152, while support is at 0.7133 and 0.7126.
Further support is at the 100-period SMA at 0.7075. The technical section was produced with help from an AI tool.
We are seeing the AUD/USD push toward 0.7140 as the US dollar loses some of its recent strength. This shift comes from profit-taking in the dollar and a slight improvement in overall market mood. For us, this suggests the recent downward pressure on the Aussie might be easing for now.
Recent data strengthens this view, with Australia’s Q1 2026 CPI report showing inflation at a stubborn 3.8%, well above the Reserve Bank of Australia’s target. In contrast, the latest US Core PCE reading for March edged down to 2.7%, fueling speculation the Federal Reserve will hold rates steady in June. This policy divergence is a key factor supporting the Aussie dollar.
Given the pair is consolidating around 0.7140, we see an opportunity in buying near-term call options with strike prices just above the 0.7150 resistance level. This strategy lets us capitalize on a potential upward breakout while limiting our downside risk if the range-bound trading continues. The current implied volatility of around 8.5% for front-month options makes entry costs reasonable.
We must remember the false rally we saw in the third quarter of 2025, when a brief risk-on mood was quickly crushed by renewed hawkishness from the Fed. While the current situation feels different due to the inflation data, the ongoing Middle East tensions could still trigger a rapid flight to safety. Therefore, keeping our position sizes modest is a prudent approach for the coming weeks.
For those with a slightly more neutral to bullish outlook, selling out-of-the-money put options with strikes near the 0.7075 support level is an attractive strategy. This allows us to collect premium as long as the Aussie doesn’t break down significantly. The data suggests a floor is forming, making this a calculated risk for income generation.
