The Australian Dollar (AUD) is under pressure as risk aversion intensifies following U.S. airstrikes on Iran’s nuclear sites. The AUD/USD pair fell for the third consecutive session on Monday, signaling mounting concerns in global markets despite improved domestic economic data.
Investor risk appetite took a hit after U.S. President Donald Trump confirmed strikes on Iran’s key nuclear facilities—Fordow, Natanz, and Isfahan—late Saturday. The attack, reportedly coordinated with Israel, triggered immediate threats from Iran, including a parliamentary move to approve the closure of the Strait of Hormuz—a critical route for global oil shipments.
This renewed geopolitical turmoil has led traders to shift capital into safe-haven assets, pulling demand away from risk-sensitive currencies like the Australian Dollar.
On the economic front, Australia’s latest flash PMI data offered mixed signals. The Manufacturing PMI held steady at 51.0, while the Services PMI improved from 50.6 to 51.3, pushing the Composite PMI to 51.2 in June—up from 50.5. Despite signs of modest expansion, the data did little to offset risk-driven losses in the AUD/USD pair.
Adding to the economic narrative, recent labor market data showed a concerning dip. The Australian Bureau of Statistics reported a 2.5K drop in employment for May, sharply contrasting with April’s 87.6K gain. The Unemployment Rate, however, remained unchanged at 4.1%.
Meanwhile, Federal Reserve Governor Christopher Waller hinted on Friday that the U.S. central bank may begin cutting interest rates as early as July, depending on inflation and labor data trends. While the Fed held rates at 4.5% during its June meeting, markets now anticipate up to 50 basis points of rate cuts by the end of 2025.
Despite these dovish hints, safe-haven demand for the US Dollar remains elevated due to geopolitical risks, keeping the AUD/USD pair under pressure.
China, a key trading partner of Australia, kept its Loan Prime Rates (LPRs) unchanged on Friday, with the one-year LPR at 3.00% and five-year LPR at 3.50%. Recent economic figures showed Retail Sales climbing 6.4% YoY in May, beating expectations, while Industrial Production rose 5.8%, slightly below forecasts.
Despite these stable indicators, the National Bureau of Statistics warned that China’s economic momentum may soften in Q2 2025 due to global trade uncertainties—another potential headwind for the Australian Dollar.
As of writing, the AUD/USD pair trades near 0.6430, below both the 50-day EMA (0.6432) and the nine-day EMA (0.6474), signaling short-term bearish momentum. The break beneath the ascending channel pattern reinforces this view.
The 14-day RSI is below the 50 level, further supporting bearish sentiment.
If bulls regain control, a move above 0.6474 could push the pair toward the seven-month high at 0.6552 seen on June 16. However, persistent global tension and risk-off mood could keep AUD/USD subdued in the near term.
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