Australian Dollar tumbles as Hormuz strikes spark US Dollar flight

• US-Iran strikes lift Dollar as traders dump risk currencies.
• ADP, JOLTS and ISM data reinforce US resilience.
• Australia's GDP miss deepens concerns over household demand.

The Aussie Dollar drops some 0.70% on Wednesday as risk appetite shifted sour as hostilities in the Middle East resumed amid the lack of progress in US-Iran talks to reach a deal

AUD/USD slides as haven demand and weak GDP bite

The AUD/USD trades at 0.7128, after peaking at around 0.7181 as investors seeking safety bought the US Dollar after the US and Iran exchanged strikes around the Strait of Hormuz, with the latter also attacking US assets in Kuwait, the UAE and Saudi Arabia.

The US Centre of Command reported that they attacked missile launch sites and Iranian boats poised to lay mines. They also attacked Qeshm Island in response to Iranian attacks.

US jobs data reflect the strength of the labour market. Private companies hiring in May exceeded forecasts as the ADP National Employment Report showed an increase of 122K, beating the forecast of 117K. Tuesday’s JOLTS report also showed increased job openings, indicating resilience ahead of Friday’s Nonfarm Payrolls.

The US ISM Services PMI rose from 53.6 to 54.5 as businesses ordered, anticipating higher prices. The Prices Paid component increased from 70.7 to 71.3, indicating the energy shock spreading to services.

Fed officials crossed the wires. Dallas Fed President Lorie Logan said that policy is “a bit loose” adding that it needs to be restrictive, as inflation is taking too long to return to 2%. Earlier, New York Fed President John Williams stated that monetary policy “is exactly in the right place,” and he added that he doesn’t “see any need to raise or lower interest rates right now.”

Data from Australia showed that the economy lost some momentum in Q1 2025, as GDP expanded 0.3% QoQ, down from the 0.8% jump in the previous quarter, and below estimates for a 0.5% expansion. The slowdown could worsen as the Middle East conflict and policy tightening by the Reserve Bank of Australia (RBA) weigh on households' spending,

Ahead, traders' eyes will be on the Australia Trade Balance for April and on RBA Governor Michael Buxton's speech.

AUD/USD Price Forecast: Technical outlook

In the daily chart, AUD/USD trades at 0.7130. The pair sits just above the latest simple moving average cluster around 0.7117, while an active upward support trend line also runs slightly below price near 0.7111, suggesting nearby dip-buying interest. However, another rising support line now projects just above spot around 0.7158, acting as immediate resistance and effectively compressing price into a narrow consolidation band. The Relative Strength Index (14) has slipped toward the mid‑40s, hinting at fading bullish momentum and keeping the near-term bias broadly neutral as the pair oscillates around this support–resistance pocket.

On the downside, initial support is seen at the 50/100/200-day simple moving average area around 0.7117, reinforced by the underlying rising trend line near 0.7111. A break below there would expose deeper trend-line supports clustered around 0.7087 and 0.7086. On the topside, immediate resistance comes at the upward trend projection around 0.7158; a daily close above this cap would ease the current rangebound tone and open the door to a more constructive advance.

(The technical analysis of this story was written with the help of an AI tool.)