Australian Dollar falls as US-Iran tensions weigh on risk sentiment

• AUD/USD trades lower as escalating US-Iran tensions weigh on the risk-sensitive Aussie.
• Trump said the Strait of Hormuz would remain open under US protection, while Iran rejected Washington’s role and warned of its military response.
• Investors await China’s Q2 GDP and activity data, alongside US June CPI, with softer US inflation potentially limiting further USD strength.

AUD/USD trades lower near 0.6930 on Monday, retreating from an opening level of around 0.6950 as escalating tensions between the United States (US) and Iran bolster the safe-haven US Dollar (USD) and weigh on the risk-sensitive Australian Dollar (AUD).

US President Donald Trump said the Strait of Hormuz would remain open “with or without Iran” and announced the reinstatement of a naval blockade targeting Iranian shipping. Trump also declared that the US would become the “Guardian of the Hormuz Strait” and said Washington would seek reimbursement at a rate of 20% on cargo passing through the waterway to cover security costs.

Iran rejected Trump’s remarks, with the country’s top joint military command saying that the US had no role in determining the future of the Strait. Iranian officials warned that continued US intervention could trigger further incidents in the global Oil and Gas sector, while Iran's Revolutionary Guard maintained that Tehran would continue asserting control over the strategic route.

The confrontation has pushed Oil prices higher and increased concerns that rising energy costs could keep global inflation elevated. This backdrop supports demand for the Greenback while limiting appetite for currencies linked to global growth, including the Aussie.

Investors will now turn their attention to Chinese trade and activity data, given Australia’s close economic relationship with China. China’s second-quarter Gross Domestic Product (GDP), out early Tuesday, is expected to expand 4.5% YoY, down from 5%, while quarterly growth is forecast to slow to 0.9% from 1.3%. Industrial Production is expected to improve slightly to 4.6%, while Retail Sales are projected to fall 0.1%, compared with the previous 0.6% decline.

On the US side, June Consumer Price Index (CPI) inflation on Tuesday is forecast to ease to 3.8% YoY from 4.2%, with the monthly reading expected to fall 0.1% after rising 0.5%. Core CPI is projected to remain unchanged at 2.9% YoY and 0.2% MoM.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.6934. The pair holds fractionally above the 100-period Simple Moving Average (SMA) at 0.6930 but remains capped by the 20-period SMA at 0.6940, leaving the near-term tone broadly neutral with a slight topside constraint. Horizontal resistance levels clustered just above price, together with a Relative Strength Index (RSI) hovering near 48, suggest consolidative conditions rather than a clear directional push for now.

On the topside, initial resistance is seen at the 20-period SMA around 0.6940, followed by the horizontal barriers at 0.6938 and 0.6944, with a stronger cap emerging near 0.6948. On the downside, immediate support is provided by the 100-period SMA at 0.6930, with the next horizontal floor near 0.6928, and a sustained break below this band would expose a deeper corrective phase within the broader consolidation.

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