AUD\/USD rose for a third session, trading near 0.7100 in Asian hours on Monday. The move came as the US Dollar weakened against major peers amid ongoing tariff uncertainty.<\/p>\n
Trade policy uncertainty stayed high after President Donald Trump criticised the Supreme Court for blocking his use of emergency powers for reciprocal tariffs. CNBC reported Trump said on Saturday he plans to raise global tariffs to 15% from 10%, with the changes \u201ceffective immediately\u201d, and warned of more levies.<\/p>\n
The rise in AUD\/USD may be limited as risk appetite falls amid US-Iran tensions. The New York Times reported on Sunday that Trump is weighing limited airstrikes on Iran, with broader action possible in coming months if diplomacy or an initial strike does not change Iran\u2019s nuclear stance.<\/p>\n
The next round of US-Iran talks is set for Thursday in Geneva, while the US is assessing other options if talks fail. The Australian Dollar has also been supported by expectations that the Reserve Bank of Australia may keep a tightening bias to address inflation.<\/p>\n
Key AUD drivers include RBA interest rates, iron ore prices, China\u2019s economic health, inflation, growth, trade balance, and market mood. Iron ore is Australia\u2019s largest export at $118 billion a year, based on 2021 data, and the RBA targets inflation of 2-3%.<\/p>\n
We recall that back in 2025, the conversation around AUD\/USD was driven by US tariff uncertainty and a hawkish Reserve Bank of Australia. Geopolitical risks from US-Iran tensions were seen as a potential cap on gains, while strong domestic data in Australia provided support. This pushed the pair towards the 0.7100 level.<\/p>\n
The situation has changed considerably as we look at the market today, February 23, 2026. With Australian quarterly inflation easing to 3.1% last month, the Reserve Bank of Australia has softened its tone, and markets are no longer pricing in hikes. The RBA cash rate has been holding at 3.85% for two consecutive meetings, shifting the outlook from the tightening bias we saw last year.<\/p>\n
Furthermore, fundamental support for the Aussie dollar has weakened. Recent Chinese manufacturing PMI data came in at a contractionary 49.8, signaling continued sluggishness in the economy of Australia\u2019s largest trading partner. Consequently, iron ore prices have slipped to around $95 per tonne, a sharp contrast to the stronger prices we observed through parts of 2025.<\/p>\n
On the other side of the pair, the US dollar’s narrative is no longer dominated by the tariff uncertainty of the past. Instead, the focus is on the Federal Reserve’s policy pivot, with the Fed funds rate now at 3.75% following a cut last December. This suggests that while the US dollar isn’t aggressively strengthening, the relative weakness of the Aussie’s fundamentals is becoming more pronounced.<\/p>\n
For derivative traders, this environment suggests considering strategies that benefit from range-bound price action or a slight downside in AUD\/USD. Buying AUD\/USD puts with a strike price around 0.6400 could offer protection against a further slide driven by RBA dovishness or weak Chinese data. The current spot price of 0.6550 makes these options relatively affordable.<\/p>\n
Alternatively, selling out-of-the-money call options or establishing call spreads with a ceiling around 0.6750 could be a viable strategy to generate income. This capitalizes on the view that any rallies will be limited given the headwinds from lower commodity prices and a less supportive central bank policy than we saw last year. Such a strategy performs well if the pair remains stagnant or drifts lower in the coming weeks.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" AUD\/USD nears 0.7100 as dollar weakens on tariffs uncertainty, though US-Iran tensions may cap gains.<\/p>\n","protected":false},"author":62,"featured_media":16963,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42502","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42502","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=42502"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42502\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16963"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=42502"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=42502"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=42502"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}