• Trump’s tougher rhetoric boosted the Dollar and pressured risk-sensitive currencies.
• Rising oil prices and firmer US yields added downside pressure.
• Hawkish RBA expectations and stronger trade data helped limit Aussie losses.

The Australian Dollar retreats by 0.36% on Thursday following harsh remarks by US President Donald Trump, who, rather than seeking to de-escalate the conflict, warned that it would last 2 to 3 weeks and would hit Iran harder. This boosted the Greenback, pushing the AUD/USD to a daily low of 0.6860 before stabilising around 0.6900

Aussie weakens as oil jumps and war fears darken sentiment again

Geopolitics continued to drive the narrative in the financial markets. Following Trump’s remarks, the US Dollar and US Treasury yields rose, as sentiment soured, sending global equities lower. Also, Oil prices rose, as depicted by WTI, up more than 11% and trading above the $111.00 per barrel milestone.

Trump’s speech reiterated that he does not need the Strait of Hormuz, while challenging US allies to work toward reopening it. Recently, he posted a video of a bridge blast in Iran in this Truth Social account and pressured Iran to reach a deal.

Meanwhile, US data showed the trade deficit widened to 3.0% to $84.6 billion in February, as imports increased 4.3% to $372.1 billion, while exports rose 4.2% to a record high of $314.8 billion.

Further data revealed that the US labor market remains firm, despite mixed figures. Initial Jobless Claims for the week ending March 28 dipped from the previous print of 215K to 202K, beneath forecasts of 212K, while the US Challenger Grey & Christmas jobs report revealed that companies slashed over 60K in March.

The Atlanta Fed's GDPNow growth estimates for Q1 2026 fell 0.3% from 1.9% a day ago to 1.6% at an annual rate, after the US Balance of Trade data.

Despite this, the US Dollar Index (DXY), which tracks the buck’s value against six currencies, is up 0.46% at 100.01, as the New York close looms.

RBA expected to further tighten policy

In Australia, the goods trade surplus more than doubled in February due to higher Gold and farm exports, data revealed. This, along with slightly hawkish rhetoric from the Reserve Bank of Australia and China’s NBS Manufacturing and Services PMI back in expansion territory, could push the AUD/USD higher.

RBA’s Assistant Governor Christopher Kent said on March 25 that the Middle East conflict has tightened financial conditions, but the supply shock also poses a risk to inflation.

The RBA’s last meeting minutes revealed that “Board members agreed that financial conditions needed to be restrictive,” and that the majority opted to demonstrate the bank’s “clear commitment to return inflation to target.”

The swaps market had priced in a 71% chance of an RBA rate hike at the May 5 meeting. Regarding this, Josh Williamson, chief Australian economist at Citi, said, “We now forecast another 25bp hike from the RBA in June, in addition to the 25bp hike expected in May," he added. "This takes our terminal to 4.6% in 2026, with rate cuts still expected in 2027.”

AUD/USD Price Analysis: Technical outlook

In the daily chart, AUD/USD trades at 0.6911. The near-term bias stays mildly bullish as price consolidates above the rising cluster of the 50, 100 and 200-day simple moving averages around 0.70, keeping the broader uptrend from the 0.67 area intact despite the recent pullback. The sequence of higher supported closes along the latest upward-sloping trend line from 0.6897 underscores persistent dip-buying, while RSI around 43–45 has eased from prior overbought conditions without entering oversold territory, indicating a cooling of momentum rather than a trend reversal.

Initial support emerges at the 0.6900–0.6880 band, where the most recent swing low aligns with the rising trend-line zone, followed by deeper support near 0.6830 if that structure fails. On the topside, the first resistance stands at 0.7020, ahead of 0.7080, where prior highs capped advances and the moving averages begin to flatten. A daily close above 0.7080 would reopen the path toward the 0.7120–0.7150 area, while a decisive break below 0.6880 would neutralize the current bullish bias and expose the 0.68 handle.

(The technical analysis of this story was written with the help of an AI tool.)