AUD/USD was little changed on Monday, holding around 0.7165–0.7166, as an oil price jump linked to the Middle East conflict lifted US Treasury yields without delivering a broader boost to the US dollar. Oil rose after the US and Iran exchanged strikes and President Trump said the US would retaliate, while the session’s US calendar was light, limited to the Dallas Fed manufacturing survey, which beat estimates in August. Attention now turns to a heavy US data run, with market pricing still sensitive to a hawkish tilt in Federal Reserve communication.
In Australia, upcoming releases include S&P Global Manufacturing PMI for August after a prior 52.0 reading, alongside Building Permits for July and GDP due on 2 September. Inflation remains on watch after trimmed mean CPI printed 3.6% year on year on 26 August, and the latest RBA minutes showed members debated a 25bp move versus holding while flagging upside inflation risks. Technically, spot remains above the 0.7016 moving-average cluster, with supports traced from 0.6673–0.6897; resistance is cited near 0.7198 and a longer-term trend line from about 0.8015, while RSI sits in the low-60s.
Derivative Trading Strategies Amid Upcoming Events
We suggest derivative traders prepare for heightened volatility in the AUD/USD pair over the coming weeks as geopolitical tensions and key economic data collide. With AUD/USD currently holding steady around 0.7165, our immediate focus is on Australia’s GDP release tomorrow, September 2. Historically, unexpected shifts in Australia’s economic growth have triggered sharp 50 to 80 pip movements in the Aussie dollar within minutes of the announcement.
We recommend utilizing options contracts to hedge against sudden swings driven by the highly volatile energy market. Recent Middle East conflicts have pushed Brent crude oil prices higher, which in turn lifts US 10-year Treasury yields toward the 4.3% mark. By using option straddles, we can profit from these rapid market swings regardless of which direction the currency pair breaks.
Monitoring Inflation, Policy, and Key Technical Levels
We must also watch the interest rate outlook closely, especially with Australia’s core inflation remaining sticky at 3.6%. The Reserve Bank of Australia’s hawkish stance, combined with tight US monetary policy, means interest rate swaps are pricing in a higher-for-longer environment. Any hawkish surprises in upcoming US economic data could quickly strengthen the Greenback and pressure our AUD/USD positions.
From a technical perspective, we should monitor the 14-period Relative Strength Index as it hovers in the constructive low-60s. If the pair breaks above the key resistance at 0.7198, we can look to establish long positions to capture a run toward the major descending trend line. However, we should place protective stop-losses just below the solid support level of 0.7016 to limit our downside risks.
