AUD\/USD rose over 1.3% on Tuesday, climbing from about 0.6970 to near 0.7060 by the close. The move followed a two-week pause in military action against Iran, and WTI fell from above $106 to below $90 per barrel.<\/p>\n
WTI remains about 55% above its pre-war level near $58 after the late-February Strait of Hormuz disruption. AUD\/USD moved back above the 200-period EMA on the four-hour chart near 0.6970, marking its strongest one-day rise in weeks.<\/p>\n
Markets had been pricing an RBA rate move to 4.35% or higher at the May meeting amid higher energy costs. In Australia, the S&P Global Composite PMI for March fell to 46.6 from 47, while the TD-MI Inflation Gauge rose 1.3% month-on-month and the annual rate increased to 4.3% from 3.6%.<\/p>\n
The pause was announced ahead of a midnight GMT Wednesday deadline set by President Trump. Pakistan\u2019s Prime Minister brokered the pause, and Tehran delivered a 10-point proposal, after Iran had rejected a 45-day ceasefire earlier.<\/p>\n
S&P 500 futures rose 1.1% and Nasdaq futures gained 1.2%, reducing US Dollar demand. February US Durable Goods Orders fell 1.4%, while the ex-transport measure rose 0.8%.<\/p>\n
FOMC Minutes are due Wednesday, with speeches from Fed officials Daly and Waller. Traders are watching for shipping to restart through the Strait of Hormuz after four deadline changes since late February.<\/p>\n
Technically, the Stochastic Oscillator is nearing overbought. Holding above 0.7000 may target 0.7120, while a drop back below 0.6970 may refocus attention on 0.6900.<\/p>\n
Looking back at the sharp AUD\/USD rally in early April 2025 reminds us how sensitive the pair is to geopolitical shocks and shifts in risk appetite. The sudden de-escalation between the US and Iran sent oil prices tumbling, which dramatically altered the inflation outlook for the Reserve Bank of Australia. We should remain positioned for similar volatility, as any unexpected peace dividend can trigger an aggressive unwinding of safe-haven US Dollar positions.<\/p>\n
That dynamic from last year, where falling energy prices eased pressure on the RBA, contrasts with today’s situation. The RBA has now held its cash rate steady at 4.35% for seven consecutive meetings, as the quarterly Trimmed Mean CPI has only cooled to 3.7%, still stubbornly above target. This sustained restrictive policy means any sudden drop in commodity prices could give the RBA cover to signal a dovish pivot, creating a powerful catalyst for traders using interest rate swaps to bet on rate cuts.<\/p>\n
We learned in 2025 that headlines can spark huge rallies, but follow-through requires confirmation, which in that case was the physical resumption of shipping. Today, with the US Dollar supported by a Federal Reserve hesitant to cut rates while core PCE remains at 3.0%, we should be wary of chasing headline-driven rallies. Instead, we can use options to define our risk, such as buying short-dated AUD\/USD call spreads to cheaply position for a potential upside surprise without being fully exposed if it proves to be another false dawn.<\/p>\n
The collapse in WTI crude from over $106 to below $90 a barrel was the core driver of the 2025 move, directly impacting Australia’s terms of trade and inflation expectations. With WTI currently trading near $92 on the back of tight supply and steady global demand, the memory of last year\u2019s 15% drop in just a few sessions is a crucial lesson. Traders holding long energy positions should consider using puts on oil futures as a portfolio hedge against a sudden geopolitical breakthrough that could once again flood the market.<\/p>\n
Technically, the 2025 rally saw AUD\/USD slice through its 200-period moving average on the four-hour chart, a key level that had been resistance. That event shows how quickly sentiment can invalidate technical patterns, turning former ceilings into new floors for price. We can apply this by setting alerts around major long-term moving averages, and if a risk-on event pushes the price through one, we can use it as a signal to initiate positions with a stop-loss just below that same average.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" AUD\/USD surges 1.3% as Iran action pauses, oil plunges; risk rallies, USD eases, key levels watched.<\/p>\n","protected":false},"author":103,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-47000","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t