Australian Data And Central Bank Policy
Australia’s February job growth was stronger than expected and the Unemployment Rate held steady. These data supported the view that the economy can handle higher rates. Demand for the US Dollar could rise if the US-Israel war with Iran intensifies. Israel said it “acted alone” in a strike on Iran’s South Pars gas field, and Iran reported missile and drone strikes and attacks on US bases and energy sites in Qatar, Saudi Arabia, and the UAE. On the chart, AUD/USD held above the rising 100-day exponential moving average near 0.6860 and traded in the upper half of the Bollinger Band range. Support was at 0.7050 then 0.7000, with 0.6920–0.6900 next; resistance was at 0.7125 then 0.7150, with 0.7200 above. Looking back a year, we recall the Australian dollar was trading with a mild bullish tone near 0.7090. At that time in March 2025, the Reserve Bank of Australia was aggressively hawkish, having just lifted its cash rate to 4.10% to combat persistent inflation. That environment, coupled with strong jobs data, provided a solid tailwind for the Aussie. The situation today is markedly different, as the RBA has since shifted its stance in response to cooling inflation. The official cash rate now stands at 3.35%, following two cuts in late 2025, as the latest quarterly CPI data showed inflation falling to 3.4%. This policy divergence explains why AUD/USD is now struggling to hold gains around the 0.6680 level, a significant drop from the levels seen last year.Volatility And Strategy Considerations
That geopolitical tension from 2025, with the conflict involving the US, Israel, and Iran, had kept implied volatility elevated, making options strategies expensive. Today, with geopolitical risks having subsided, implied volatility for AUD/USD has fallen to near 18-month lows. This presents a cheaper opportunity for traders to use options, such as buying straddles, to position for a potential breakout if economic data surprises. While the support level of 0.7050 was a key floor last year, our focus has now shifted much lower. The critical support for the coming weeks sits near the 0.6600 psychological level, with any break below threatening a move toward the 2025 lows. On the upside, selling call spreads with a strike price near the formidable resistance at 0.6750 could be a prudent strategy, capitalizing on the currently weak sentiment. Create your live VT Markets account and start trading now.
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