AUD/USD traded with mild gains near 0.7175 in early Asian dealing as the US Dollar eased on concerns over the US Treasury’s plans to expand buybacks of longer-dated government debt, with RBA Meeting Minutes due on Tuesday. Treasury Secretary Scott Bessent said the department could lift bond buybacks beyond $4 billion, after it pledged to at least double the size of its buybacks of longer-dated debt to help rein in yields. Meanwhile, rising Middle East tensions remained in focus: Iran’s Foreign Minister Abbas Araghchi rejected the prospect of new US sanctions on Sunday, while security chief Mohsen Rezaei warned of “earthquake-like” retaliation if President Donald Trump took further action.
In Australia, DBS cited a weaker labour market report, pointing to 15.8k job losses in July versus expectations for a 12k increase, which has sharpened attention on upcoming releases such as the July CPI and their implications for RBA expectations. On the charts, AUD/USD held a bullish near-term bias above the 20-period Bollinger middle band and the 100-day MA, with the RSI (14) around 70.0 and price pressing the upper band. Support levels were seen at 0.7072, then 0.7065 and 0.6955, while resistance sat at 0.7175.
Derivative and Technical Trading Strategy for AUD/USD
We suggest derivative traders look closely at the AUD/USD resistance level near 0.7175 as we enter late August 2026. With the daily Relative Strength Index (RSI) hovering around 70, the pair is technically overbought and ripe for a short-term pullback. Traders might consider buying short-term put options to target a retracement toward the 100-day moving average at 0.7072.
The primary driver depressing the US Dollar is Treasury Secretary Scott Bessent’s plan to expand long-dated bond buybacks beyond $4 billion. Historically, similar government buyback programs have suppressed yields and weakened the greenback. This monetary backdrop suggests that while we expect a temporary pullback, the broader medium-term trend for the Australian Dollar remains constructive.
Impact From Australian Labor Market and Geopolitical Risks
On the Australian side, we must weigh the recent labor market shock where the economy unexpectedly lost 15.8k jobs. This disappointing data, which missed expectations of a 12k gain, could prompt a more cautious tone in the upcoming Reserve Bank of Australia minutes. Derivative traders should employ volatility strategies, like straddles, to capture sharp moves surrounding these central bank releases.
Finally, we advise keeping a close eye on escalating Middle East tensions, which traditionally trigger safe-haven flows into the US Dollar. Threats of retaliation from Iran could quickly reverse the Australian Dollar’s recent gains. Holding out-of-the-money AUD/USD put options serves as an effective hedge against sudden geopolitical spikes.
