AUD/USD traded with a mild positive bias on Tuesday, supported by a softer US Dollar. The pair was around 0.7132, its highest level since March 12.
Hopes of renewed US-Iran talks weighed on the US Dollar and supported risk-sensitive currencies such as the Australian Dollar. Expectations of a possible agreement pushed oil prices lower, easing near-term inflation risks and reducing pressure on the Federal Reserve to tighten policy.
Softer-than-expected US Producer Price Index data added to downside pressure on the US Dollar. The US Dollar Index (DXY) traded around 98.00, its lowest level since March 2.
Support for the Australian Dollar also came from a comparatively hawkish Reserve Bank of Australia stance amid still-sticky inflation. On the daily chart, AUD/USD remains in a broader bullish structure after breaking back above the 50-day Simple Moving Average (SMA).
The March low near 0.6833 aligned closely with the 100-day SMA. The 50-day SMA is near 0.7033 and sits above the 100-day SMA near 0.6874.
The 14-day RSI was around 63, and the MACD moved above the zero line with positive histogram bars. Support is at 0.7033, then 0.6920 and 0.6874, while resistance is 0.7150-0.7170 and then 0.7200.
We recall that this time last year, in March 2025, the AUD/USD pair showed considerable strength, pushing above the 0.7100 level. The current market, however, presents a starkly different picture, with the pair struggling to maintain its footing around the 0.6550 mark. The bullish technical signals we observed in 2025 have since inverted, reflecting a fundamental shift in market drivers.
The softer US Dollar seen last year has been replaced by notable strength, with the US Dollar Index (DXY) now trading consistently above 104, a significant jump from the 98.00 level seen in early 2025. A key reason for this is that the Federal Reserve has held its policy rate firm in a 5.25%-5.50% range as recent US inflation data proved sticky, coming in at an annual rate of 3.5%. This has dampened the expectations for imminent rate cuts that were building last year.
Meanwhile, the Reserve Bank of Australia’s hawkish momentum from 2025 has plateaued, with the central bank holding its cash rate steady at 4.35%. Although inflation remains a topic of concern in Australia, the most recent quarterly figures show it has moderated to 4.1% from its peak. This has reduced the immediate pressure on the RBA to pursue further rate hikes, removing a key pillar of support that the Australian dollar enjoyed a year ago.
Given this reversal, derivative traders should adjust their outlook for the coming weeks. The bullish strategies that were profitable in 2025 are no longer appropriate, and we see opportunities in positioning for a range-bound or weaker Australian dollar. We believe buying AUD/USD put options provides a clear, risk-defined way to capitalize on potential further downside toward the 0.6400 level.
Another approach would be to consider the pair’s failure to reclaim its former highs as an opportunity to generate income. For those holding the currency, writing covered calls with strike prices around the 0.6650 to 0.6700 resistance area could be an effective strategy. This allows traders to collect premium while the fundamental picture keeps a lid on any significant rallies.
