• Fed hike pricing keeps the dollar supported before the Core PCE.
• Australian inflation and jobs data could test RBA patience.
• US-Iran sanctions waiver shifts geopolitics behind macro risks.

The Australian Dollar retreated by 0.15% on Monday as the US Dollar held onto gains of 0.24% in the US Dollar Index (DXY), following the round of talks between the US and Iran in Switzerland. At the time of writing, the AUD/USD tumbles below 0.7000, poised to re-test lower prices.

AUD/USD falls as hawkish Fed bets outweigh geopolitical relief

The Federal Reserve's shift in stance caught investors off guard, with markets beginning to price in a more hawkish central bank. Money markets had priced in nearly 40 basis points of tightening this year, while commercial banks like Bank of America and Deutsche Bank expect three and two rate hikes by the Federal Reserve, respectively, in 2026.

This week, traders' eyes will be on the US inflation data, namely the Core Personal Consumption Expenditures (PCE) Price Index. A miss to the upside would increase the chances of seeing the Fed moving towards rate increases, to the detriment of US President Trump’s wishes for lower rates. On the other hand, a soft reading would be a relief for the Fed and its new Chair, Kevin Warsh, who Trump appointed to pursue lower rates.

In Australia, inflation and jobs data are eyes. If inflation rises above estimates and the unemployment rate rises, this will put pressure on the Reserve Bank of Australia (RBA), increasing the risk of a stagflationary scenario.

On the other hand, soft readings in inflation and employment would ease pressure on the RBA.

In the meantime, geopolitics seems to be taking a back seat, as the US waived sanctions on Iran for 60 days. US Vice President JD Vance said negotiations laid a “good foundation” for peace. Iran denied nuclear talks. The fighting over Lebanon is ending after Iran threatened to close the Strait, prompting US President Trump to say he would resume attacks if they shut Hormuz.

The upcoming US economic calendar features S&P Global Flash PMIs and housing data. Thursday's agenda is busy with GDP reports for Q1 2026, the Fed’s preferred inflation metric, the Core PCE Price Index, and Initial Jobless Claims data.

AUD/USD Price Forecast: Technical outlook

In the daily chart, AUD/USD trades at 0.6998, keeping a bearish near-term bias as spot clings to a tested pivot on the long-running uptrend from 0.6833 while remaining decisively below the simple Moving Average Triple around 0.7139. The loss of altitude beneath this moving-average cluster and the broader pack of former rising trend-line supports, now positioned above price, suggests rallies are likely to be capped, a view reinforced by the Relative Strength Index (14) slipping toward the mid-30s, signalling weak momentum.

On the topside, immediate resistance emerges at the nearby pivot zone around 0.7000, with stronger supply seen at the simple moving average cluster near 0.7140 and extending into the broader band of prior ascending trend-line structures sitting further overhead. On the downside, the absence of clearly defined sub-price structural levels in the data leaves AUD/USD vulnerable to further slippage if the 0.7000 area gives way, with traders likely to use any corrective bounces toward the 0.7140 region as opportunities to fade the move within the prevailing bearish setup.

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