The Australian dollar rose 0.28% to about 0.7018 against the US dollar during Tuesday’s European session, supported by a shift towards risk-on positioning tied to hopes of a near-term halt in US–Iran exchanges. S&P 500 futures added 0.45% to around 7,477, while the US Dollar Index (DXY) slipped 0.11% to near 100.89, pointing to softer demand for safe-haven assets. Iran said on Monday it had received a mediator-backed proposal calling for a 10-day cessation of strikes to explore a route back to an interim deal.
Attention now turns to Australian June employment data due Thursday, where the economy is forecast to add 15K jobs versus 40.3K in May, while the Unemployment Rate is expected to hold at 4.4%. AUD/USD was last around 0.7016 and remains above the 20-day EMA at 0.6975; the RSI (14) has climbed to 55.8. Support is seen at 0.6975 and then the June 30 low of 0.6865, with resistance eyed at 0.7100.
Derivative Trading Opportunities and Technical Analysis
With the AUD/USD pair breaking above the critical 0.7000 threshold today, we see a strong opportunity for derivative traders to position for further upside toward the 0.7100 target. This bullish outlook is supported by a global shift toward risk-on assets, highlighted by S&P 500 futures climbing toward 7,477 and the US Dollar Index slipping to 100.89. This upward momentum suggests that purchasing near-term call options or entering long futures contracts is a preferred strategy for the coming weeks.
From a technical perspective, the pair’s position above the 20-day exponential moving average at 0.6975 indicates robust underlying demand. Additionally, the 14-day Relative Strength Index sits at 55.8, meaning there is still plenty of room for upward movement before the currency becomes overbought. We recommend using the 0.6975 level as a tight stop-loss limit for long positions, while a break below this could signal a deeper retracement toward the June 30 low of 0.6865.
Central Bank Divergence and Event Risk Outlook
Historically, divergence in central bank policies has heavily influenced this pair, and with the US Federal Reserve easing interest rates while the Reserve Bank of Australia keeps its cash rate steady at 4.35%, the yield differential supports a stronger Aussie. Recent economic data shows a resilient Australian economy, which continues to bolster investor confidence in the local currency. We believe this macroeconomic backdrop will keep the US Dollar on the defensive, further fueling the AUD/USD rally.
Traders must prepare for heightened volatility later this week as Australia releases its June employment data, which is expected to show 15K new jobs and a steady 4.4% unemployment rate. Friday’s preliminary PMI data for both the US and Australia will also serve as crucial triggers that could accelerate the march toward 0.7100. For options traders, implied volatility may spike ahead of these releases, making debit spreads an attractive way to limit premium costs while capturing the expected upside.
