AUD/USD pushes near four-year highs as Iran deal hopes weigh on US Dollar
- AUD/USD climbed roughly 0.8% on Wednesday but stalled close to 0.7250 as bullish momentum faded near four-year highs.
- Risk appetite firmed as Trump paused operations in the Strait of Hormuz and signalled progress on a US-Iran peace deal.
- Thursday's Australian Trade Balance and Friday's US NFP report present the next key catalysts for the pair.
AUD/USD gained roughly 0.8% on Wednesday, settling close to 0.7240 after testing 0.7280 intraday and failing to hold above the 0.7250 handle. The pair is trading at four-year highs, but a cluster of upper wicks and small-bodied candles at the day's peak point to fading bullish momentum as price tests this multi-year zone.
The US Dollar weakened broadly on Wednesday after President Trump paused "Project Freedom" operations in the Strait of Hormuz, citing progress in Pakistan-mediated talks with Iran. Iranian Foreign Ministry spokesperson Esmail Baghaei confirmed Tehran was reviewing the latest US proposal but had yet to deliver a formal response, with some Iranian officials reportedly dismissing the one-page memo as a list of "American wishes" rather than a serious offer. Both sides have continued to exchange fire despite the nominal ceasefire holding since 8 April, and the strait remains effectively closed to most commercial traffic, leaving the substance behind the latest round of diplomatic optimism thin.
April ADP private payrolls beat consensus at 109K versus 99K expected, but the US Dollar drew little support; hawkish remarks from Federal Reserve official Alberto Musalem were unable to offset the broad risk-on tone. Thursday's Australian Trade Balance (March) is the next pair-specific test, before Friday's US Non-Farm Payrolls (NFP) report becomes the dominant catalyst, with consensus calling for a sharp slowdown to 60K from 178K previously.
AUD/USD 15-minute chart
Technical Analysis
In the fifteen-minute chart, AUD/USD trades at 0.7239. The pair holds above the day’s open at 0.7205, keeping a mild intraday bullish bias in place as buyers defend the recent recovery from lower levels. The Stochastic RSI at around 60 leans positively but is not overbought, suggesting upside pressure persists without yet signaling exhaustion.
On the downside, initial support is located at the day’s open near 0.7205, where a break would weaken the constructive tone and expose deeper retracement toward prior intraday lows. With no major moving averages or structural resistance levels provided overhead, short-term price action is likely to be driven by momentum swings, with a sustained Stochastic RSI push toward overbought territory needed to signal a more extended advance.
In the daily chart, AUD/USD trades at 0.7239. The pair holds well above both the 50-day Exponential Moving Average (EMA) at 0.7072 and the 200-day EMA at 0.6826, keeping the near-term bias constructive as the medium-term trend remains pointed higher. The short-term pullback in the Stochastic RSI toward the mid-range around 53 suggests momentum has cooled from overbought territory but still hints at ongoing upside pressure while price action stays supported by these underlying averages.
On the downside, initial support is seen at the 50-day EMA near 0.7072, where a dip could attract buyers on first test, ahead of the more distant 200-day EMA at 0.6826, which underpins the broader bullish structure. With no nearby technical resistance levels highlighted by the current dataset, further gains would likely depend on how spot behaves on approaches to recent swing highs, while a daily close below the 50-day EMA would be needed to weaken the current bullish outlook.
(The technical analysis of this story was written with the help of an AI tool.)
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
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