The AUD/USD pair attracts some buyers for the third consecutive day on Thursday and remains within striking distance of its highest level since June 2022, around the 0.7275-0.7280 region, which it touched the previous day. The US Dollar (USD) struggles to build on Wednesday’s late rebound from a nearly three-week low amid the optimism over a potential US-Iran peace deal and reduced bets for a rate hike by the US Federal Reserve (Fed) in 2026. This, along with the Reserve Bank of Australia’s (RBA) hawkish tilt, acts as a tailwind for the currency pair and backs the case for a further near-term appreciating move.
US President Donald Trump struck an optimistic tone on Wednesday, saying that negotiations had made progress over the past 24 hours and that an agreement with Iran was very possible. Moreover, the news outlet Axios reported that the White House believes it was getting closer to an agreement deal with Iran on a one-page memorandum of understanding to end the war and set a framework for more detailed nuclear negotiations. The positive headlines boost investors’ confidence and keep Crude Oil prices depressed, easing inflationary concerns and tempering expectations for a more hawkish Fed.
However, the CME Group’s CME FedWatch Tool suggests that traders are still pricing in the possibility of a Fed rate hike by the end of this year. Moreover, the US ADP report showed on Wednesday that private-sector employment grew by 109K in April, compared to a downwardly revised reading of 61K in the previous month. This indicates continued, though uneven, strength in the US labor market and limits deeper USD losses. Traders also seem hesitant and reassess the likelihood of a US-Iran deal before initiating fresh bearish USD positions or positioning for any further AUD/USD appreciation.
Iran’s state-linked media pushed back against claims of a broader agreement and said, citing the Iranian Students’ News Agency, that the US proposal includes provisions that Tehran has already rejected in recent days. Adding to this, the BBC reported that Iran is reviewing the US proposal that would gradually reopen the Strait of Hormuz and lift the American blockade on Iranian ports. Furthermore, Trump threatened that Iran would be bombed “at a much higher level and intensity than it was before” if it didn’t agree to a peace deal. This keeps geopolitical risk premium in play, which should help limit deeper losses for the safe-haven Greenback and cap the upside for the AUD/USD pair, warranting some caution for bullish traders.
Meanwhile, the Reserve Bank of Australia raised its benchmark interest rate for the third consecutive time, to 4.35% at the end of the May monetary policy meeting on Tuesday. In the accompanying policy statement, the central bank indicated that inflation remains too high and refused to rule out further tightening. This marks a significant divergence in comparison to the Fed policy expectations, which might continue to benefit the Australian Dollar (AUD). This suggests that the path of least resistance for the AUD/USD pair is to the upside, and any corrective slide is more likely to be bought into.
AUD/USD 4-hour chart
Technical Analysis:
This week’s breakout through the 0.7200 horizontal barrier comes on top of the recent bounce from the 100-period Exponential Moving Average (EMA) on the 4-hour chart and validates the positive outlook for the AUD/USD pair. Moreover, momentum indicators keep the broader upswing supported.
In fact, the Relative Strength Index (RSI) hovers near 67, suggesting firm but increasingly stretched upside momentum, while the Moving Average Convergence Divergence (MACD) indicator remains in positive territory with a modestly positive line. This, in turn, hints that buyers still have the upper hand even as upside traction begins to level out.
Meanwhile, initial support is defined by the 100-period EMA at 0.7160, which acts as the key dynamic floor that would need to give way to signal a deeper corrective phase. On the upside, the elevated RSI near overbought territory suggests that gains could slow and prompt a pause or minor pullback before bulls attempt to extend the advance further above the recent highs.
(The technical analysis of this story was written with the help of an AI tool.)
