AUD/USD eased towards the 0.7010 area on Tuesday after retreating from a four-week high, yet it stayed above the 0.7000 threshold as softer US data capped demand for the US Dollar. The US Dollar Index hovered near 101.00 after touching its highest level since July 15, while markets weighed Middle East tensions and higher oil prices against evidence that inflation momentum is cooling.
June CPI fell 0.4% month on month and the annual rate slowed to 3.5; weaker producer-price data reinforced that tone. Labour signals also moderated, with the ADP Employment Change four-week average slipping to 16.5K from a revised 19.25K. Attention now shifts to Australia’s June jobs report on Thursday: employment is forecast to rise 15K after 40.3K previously, with unemployment seen steady at 4.4% and participation unchanged at 66.7%.
On the four-hour view, the pair traded at 0.7007, above the 20-period SMA at 0.6998 and the 100-period SMA at 0.6946, with a floor at 0.7003. RSI stood near 57, while resistance was flagged at 0.7014 and 0.7019, and support levels at 0.7003, 0.6998 and 0.6997.
Options Strategies in the Current Market Environment
With AUD/USD holding steady just above the crucial 0.7000 level today on July 21, 2026, we see a prime opportunity for options traders to position for a potential breakout. Given the mildly bullish technical bias on the four-hour chart, we recommend buying short-term call options with a strike price of 0.7020. This allows us to capitalize on upward momentum if the pair clears the immediate resistance at 0.7014.
Our bullish bias is supported by cooling U.S. inflation, which dropped 0.4% month-on-month in June to an annual rate of 3.5%. This cooling trend has fueled market expectations that the Federal Reserve will continue its easing cycle, keeping its benchmark rate on track to settle near 3.75% later this year. Consequently, we expect the U.S. Dollar Index to struggle to sustain its recent push toward the 101.00 mark.
The immediate catalyst for our derivative strategies is Australia’s upcoming June employment report this Thursday, where economists forecast a modest gain of 15,000 jobs. A stronger-than-expected jobs print would likely pressure the Reserve Bank of Australia to keep its official cash rate steady at its current high level of 4.35%. To trade this event, we suggest using long straddles to capture the sharp volatility expected after the release.
However, we must remain cautious as escalating geopolitical tensions in the Middle East continue to drive safe-haven demand for the Greenback and push global crude oil prices higher. To protect our long Australian Dollar exposure against sudden market downturns, we advise purchasing cheap, out-of-the-money put options with a strike near 0.6950. This hedging strategy ensures we are protected if geopolitical shocks drag the pair back toward its 100-period moving average.
