• AUD/USD declines toward 0.6940 as Aussie momentum weakens.
• Softer ADP data fails to pressure the US Dollar.
• Iran warning revives risk aversion across currency markets.

AUD/USD declines toward 0.6940 as the Australian Dollar (AUD) loses momentum, while the US Dollar (USD) remains supported by cautious remarks from the Federal Reserve (Fed) and lingering uncertainty over inflation.

The latest United States (US) labor data showed that the ADP Employment Change 4-week average eased to 21K from 24.25K, pointing to a softer pace of private hiring. The figure suggests that labor market momentum is cooling, which could normally weigh on the Greenback. However, the USD held firm as investors remained cautious ahead of more important US data and continued to price in a data-dependent Fed stance.

New York Fed President John Williams said the US economy is showing steady trend-like growth and that the job market remains stable. However, he warned that inflation is still quite high, keeping pressure on the Fed to maintain a restrictive policy stance. Williams added that monetary policy is well-positioned to achieve the Fed’s goals while stressing that future policy decisions will depend on incoming data and risks.

Hostilities resurfaced in the Strait of Hormuz as the United States and Iran have yet to reach a final peace agreement. Early Tuesday, Iranian Foreign Minister Araqchi said that negotiations on the final deal will not commence if threats continue. Iran allegedly attacked an Oil tanker in the Strait of Hormuz overnight, sending Oil prices higher and markets into risk-averse mode.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.6940, consolidating just above the 20-period Simple Moving Average (SMA) at 0.6936 while remaining capped by a dense band of nearby resistances. The 100-period SMA at 0.6957 sits overhead and, together with the horizontal barriers at 0.6943, 0.6949 and 0.6955, suggests the pair faces a topside hurdle despite the Relative Strength Index (RSI) holding around 54. This hints at mildly constructive but not impulsive momentum.

On the downside, immediate support is clustered around the short-term 20-period SMA at 0.6936 and the nearby horizontal floor at 0.6935, where a break would expose deeper corrective risk. On the topside, initial resistance comes at 0.6943, ahead of 0.6949 and 0.6955, with the 100-period SMA at 0.6957 marking a stronger cap. Only a sustained move above this upper band would open the way for a more decisive bullish extension.

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