AUD/USD Price Forecast: Finds cushion near 20-day EMA amid US-Iran war-led correction
- AUD/USD plunges amid the US-Iran war as antipodeans plummet.
- Middle East tensions have increased the safe-haven demand of the US Dollar.
- Investors await the US ISM Manufacturing PMI and RBA Bullock’s speech.
The AUD/USD pair trades 0.85% lower to near 0.7050 during the European trading session on Monday. The Aussie pair plummets as risk-off market sentiment amid the United States (US)-Iran war has weighed heavily on the Australian Dollar (AUD).
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.90% | 1.01% | 0.66% | 0.21% | 0.98% | 1.06% | 0.53% | |
| EUR | -0.90% | 0.10% | -0.22% | -0.69% | 0.07% | 0.16% | -0.36% | |
| GBP | -1.01% | -0.10% | -0.34% | -0.79% | -0.03% | 0.06% | -0.47% | |
| JPY | -0.66% | 0.22% | 0.34% | -0.44% | 0.32% | 0.41% | -0.12% | |
| CAD | -0.21% | 0.69% | 0.79% | 0.44% | 0.77% | 0.85% | 0.32% | |
| AUD | -0.98% | -0.07% | 0.03% | -0.32% | -0.77% | 0.10% | -0.44% | |
| NZD | -1.06% | -0.16% | -0.06% | -0.41% | -0.85% | -0.10% | -0.53% | |
| CHF | -0.53% | 0.36% | 0.47% | 0.12% | -0.32% | 0.44% | 0.53% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Investors shift to the safe-haven fleet as retaliatory attacks by Iran for the killing of their Supreme Leader, Ayatollah Ali Khamenei.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.8% higher to near 98.45, the highest level seen in over a month.
Going forward, major triggers for the US Dollar will be a slew of US labor market-related and ISM Purchasing Managers’ Index (PMI) data. In Monday’s session, investors will focus on the US ISM Manufacturing PMI data for February, which will be published at 15:00 GMT. The Manufacturing PMI is expected to come in lower at 52.3 from 52.6 in January.
In Australia, investors will focus on Reserve Bank of Australia (RBA) Governor Michele Bullock’s speech on Tuesday.
AUD/USD technical analysis
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AUD/USD trades sharply lower at 0.7050 at the press time. The pair has corrected to near the 20-day Exponential Moving Average (EMA), which trades around 0.7050. Near-term bias is still bullish as price holds above the rising 20-day EMA, keeping the broader upswing from late January intact despite recent consolidation off the 0.71 area.
The 14-day Relative Strength Index (RSI) has retreated toward 56 from a bullish range of 60.00-60.00, signalling cooled momentum rather than a reversal.
Initial support emerges at the 20-day EMA near 0.7050, with a break exposing the mid-February reaction low around 0.6990 and then the February 6 low around 0.6900 area as deeper downside levels. On the topside, immediate resistance stands at 0.7120, the recent swing high, followed by the 0.7150 zone, where a clear break would reopen the advance toward the 0.72 handle and confirm an extension of the prevailing daily uptrend.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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