The Australian dollar was down by 0.22% to approximately 0.7035 during early trading in Europe on Friday. This decline is attributed to a rebound in the US dollar after Iran reportedly rejected a memorandum of understanding that President Trump claimed had been agreed upon by the Iranian leadership, as covered by Iran’s Fars news agency.
As of the latest updates, the US Dollar Index was up by 0.15%, trading around 99.85, tracking the dollar’s performance against six major currencies.
On Thursday, President Trump indicated that a planned military strike on Iran had been aborted. He stated that discussions regarding a peace deal had been approved by all parties involved, both in concept and details. However, he emphasized that the U.S. naval blockage of Iranian ports would continue until a deal is reached.
In the meantime, the Australian dollar is showing a cautious stance as the Reserve Bank of Australia (RBA) prepares to announce its monetary policy on Tuesday. Analysts expect the RBA to pause its rate hikes and maintain the Official Cash Rate at 4.35%, as projected by a recent Reuters survey. So far this year, the RBA has increased the rate by 75 basis points.
AUD/USD Technical Analysis
The AUD/USD pair has fallen to around 0.7035, retaining a bearish outlook in the near term, as it remains below the 20-day exponential moving average of 0.7103 and the 50% Fibonacci retracement level of 0.7054.
The pair is just above the 61.8% retracement at 0.7002. The relative strength index (RSI) at near 39 indicates a weak—though not excessively so—downside momentum following its recent decrease from the mid-0.72 area.
Looking ahead, initial support is seen at the 61.8% Fibonacci retracement level of 0.7002, followed by the 78.6% level at 0.6929 and the swing low anchor near the 100% retracement at 0.6834. For recovery, the pair would first need to overcome the 50% retracement at 0.7054, then navigate a resistive area at the 20-day EMA of 0.7103 and the 38.2% retracement at 0.7106. A more bullish outlook could materialize if it approaches the 23.6% level at 0.7171 and the recent highs around 0.7274.
