AUD/USD rose 0.69% on Tuesday, ending a five-day losing run and closing near 0.6900 after a rebound from about 0.6830. It was the biggest one-day rise in over a week, but it stayed below 0.7000 and remains off February highs near 0.7190.
Price moved higher as risk appetite improved after reports that the White House may halt military operations against Iran, raising hopes of a diplomatic outcome in a five-week conflict. The S&P 500 gained 2.3%, while earlier pressure on the Australian Dollar was linked to higher energy costs and growth concerns.
The RBA lifted rates again in March to 4.10%, while the Federal Reserve held 3.50% to 3.75%. US data weakened, with Chicago PMI at 52.8 versus 55 expected and JOLTS at 6.88 million versus 6.92 million.
Markets are watching ADP (40K), retail sales (0.5% MoM), ISM (52.5), and NFP (60K) on Good Friday. On the 5-minute chart, AUD/USD sits at 0.6900 with support at 0.6895, 0.6885, and 0.6875/0.6870, and resistance at 0.6905, 0.6915, and 0.6925.
On the daily chart, the 200-day EMA is near 0.67 and the 50-day EMA near 0.70, with resistance at 0.7020, 0.7075, and 0.7120/0.7150. Support is at 0.6880, 0.6850, and 0.6800, with 0.6750 below that.
AUD drivers include RBA policy, China’s economy, inflation, growth, trade balance, and iron ore, which was $118 billion a year in 2021. The RBA targets 2–3% inflation and can use QE or tightening.
Looking back a year ago to March 2025, we saw the AUD/USD pair bounce sharply from the 0.6830 level. This was driven by a temporary wave of risk appetite after news of a potential de-escalation in the Middle East conflict. That move, however, stalled well short of the key 0.7000 resistance level that proved difficult to break throughout that period.
The core driver back then was the growing gap in central bank policy. The Reserve Bank of Australia had just hiked its cash rate to 4.10%, signaling more to come due to inflation pressures from the energy shock. In contrast, the US Federal Reserve was on hold, citing uncertainty and setting the stage for a policy divergence that favored the Aussie dollar.
That divergence played out over the rest of 2025, as we saw the RBA make one final hike to 4.35% while the Fed began a slow easing cycle, eventually bringing its funds rate down to the current 2.75% to 3.00% range. This policy gap was a significant tailwind that helped push AUD/USD through the 0.7100 level later in the year. Now in April 2026, the situation has become more complicated, and those tailwinds are fading.
One of the biggest headwinds we face now is the falling price of iron ore, a key Australian export. Prices have recently slipped to around $107 per tonne, a steep drop from the $130 levels seen just a few months ago. This reflects growing concerns about demand from China’s struggling property sector.
These concerns are supported by fresh data from China, which is Australia’s largest trading partner. The latest Caixin Manufacturing PMI, released just last week, fell back to 49.5, indicating a slight contraction in factory activity. This weaker outlook for Chinese growth directly weighs on the demand for Australian resources and, by extension, the Australian dollar.
Here at home, inflation has cooled considerably from its 2025 peaks, with the latest quarterly CPI figure coming in at 3.4%. While this is a marked improvement, it remains stubbornly above the RBA’s 2-3% target band. This puts the RBA in a difficult position where it cannot yet consider cutting rates, but the case for further hikes is gone.
Given that the favorable interest rate differential is no longer widening and commodity headwinds are building, the outlook for further AUD/USD gains appears limited in the coming weeks. For derivative traders, this suggests that selling call spreads with strike prices above the 0.7000 psychological level could be a viable strategy. This approach would profit from the pair remaining range-bound or drifting lower as these new fundamental pressures take hold.
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