AUD/USD experienced a sharp rally, surging over 1% earlier in the session and reaching a three-week high near 0.7085 following news of a two-week ceasefire agreement between the US and Iran. This ceasefire included Iran's commitment to reopen the Strait of Hormuz, which initially reduced safe-haven demand for the US Dollar and boosted risk-sensitive currencies like the Australian Dollar [1]. However, the momentum faded quickly as markets questioned the durability of the deal, with neither side committing to the underlying 10-point framework. As a result, traders are viewing the two-week ceasefire as a countdown rather than a resolution, leading AUD/USD to settle around 0.7050 and trade in a tight range heading into the Asian open [1].
On the domestic front, the Australian economic calendar remains empty for the rest of the week. The Reserve Bank of Australia (RBA) recently raised the cash rate by 25 basis points to 4.10% at its March meeting, and markets are pricing in the possibility of further tightening at the May decision due to elevated energy costs and persistent inflation pressures [1]. With no local data to influence trading, market attention has shifted to upcoming US economic releases, including the core Personal Consumption Expenditures (PCE) Price Index for February, fourth-quarter Gross Domestic Product (GDP) on Thursday, and March Consumer Price Index (CPI) data alongside the University of Michigan consumer sentiment and inflation expectations surveys on Friday [1].
Technical analysis shows AUD/USD trading at 0.7047, holding above the 200-period Exponential Moving Average (EMA) at 0.7005, which suggests a mildly bullish intraday bias. The Stochastic RSI near 71 indicates firm but stretched upside momentum, leaving room for consolidation or a shallow pullback as long as the pair remains above the 200-EMA. Immediate support is seen at the 200-period EMA, and buyers are expected to defend the short-term uptrend if a corrective dip occurs. The near-term structure favors further recovery attempts, with any pause likely to result in sideways consolidation rather than a deeper reversal [1].
CONCLUSION
AUD/USD's initial rally on ceasefire news was tempered by market skepticism regarding the deal's durability, resulting in a pullback and consolidation. With no domestic data, focus shifts to key US economic releases, while technical indicators suggest a mildly bullish bias as long as support holds. The market remains cautious, awaiting further clarity on both geopolitical and economic fronts.