Aussie Dollar Climbs Despite Risk-Off Mood as Traders Brace for Fed Decision and Jobs Data

The Australian Dollar (AUD) edged higher on Wednesday after posting notable losses in the previous session, even as global risk sentiment weakened amid ongoing Middle East tensions. While the geopolitical backdrop keeps investors on edge, the AUD/USD pair found support from a softer US Dollar and an improving domestic outlook.

🌍 Middle East Conflict Supports USD, But AUD Resilience Emerges

The conflict between Israel and Iran remains the dominant theme shaping market behavior. Despite a heightened state of alert, Tehran has reportedly urged regional powers such as Oman, Qatar, and Saudi Arabia to pressure U.S. President Trump into backing a ceasefire. However, Trump’s call for Iran’s “unconditional surrender” only deepened investor fears of U.S. military involvement.

The uncertainty continues to drive safe-haven flows into the USD, although the greenback slipped slightly in early trading as traders awaited the upcoming Federal Reserve policy decision.

🧾 Weaker U.S. Data and Fed Pause Limit Dollar Upside

The US Dollar Index (DXY) dipped to around 98.70, weighed down by disappointing Retail Sales figures, which dropped 0.9% in May, significantly worse than the expected 0.7% decline.

With economic data softening, markets are pricing in:

80% probability of a rate cut in September
Followed by a potential second cut in October (according to Reuters)

While the Fed is widely expected to keep rates unchanged at this June meeting, all eyes are on the revised projections (“dot plot”) and Fed Chair Powell’s tone for any hints on the rate path ahead.

🇦🇺 AUD Outlook: Focus Shifts to Australia’s Labor Market Report

Domestically, traders are awaiting key employment data from Australia later this week. The Unemployment Rate and Employment Change figures will help shape expectations around the Reserve Bank of Australia’s (RBA) next policy move.

A strong labor report could reinforce the Aussie’s recovery by fueling speculation of RBA rate hikes later in the year. Conversely, soft data may weigh on AUD sentiment.

📊 Technical Outlook: AUD/USD Holds Bullish Bias, But Momentum Fades

As of Wednesday, AUD/USD trades near 0.6480, showing signs of consolidation within a broader ascending channel on the daily chart.

🔹 RSI is slightly above 50 → favoring bullish conditions
🔹 Price is below the 9-day EMA (0.6495) → signaling weakening near-term momentum
🔹 Key resistance levels:
• 0.6495 (EMA)
• 0.6552 (June 16 high)
• 0.6687 (8-month high)
• 0.6740 (upper channel boundary)

🔻 Immediate support lies at the channel’s lower boundary (~0.6480).
A break below could test the 50-day EMA at 0.6431, shifting bias back to bearish.

🧠 Summary for DailyForex.pk Traders

Aussie Dollar gains despite geopolitical stress, aided by USD softness
Risk sentiment remains fragile, with Middle East conflict driving safe-haven moves
Fed policy statement and Australia’s labor data will determine next major move in AUD/USD
Technical bias stays bullish, but momentum needs rebuilding above 0.6495

📌 For expert analysis, chart insights, and real-time forex coverage, stay with www.DailyForex.pk — your top source for AUD/USD forecasts and currency market updates.

Hamza Shah