AUD/USD rallies on Iran MoU as RBA meeting looms

AUD/USD gains as oil drops and equities surge on peace deal hopes

AUD/USD finished flat last week at 0.7045, after rebounding from the two-month low of 0.6977 it hit mid-week. The recovery was driven by a lift in risk sentiment and stronger metal prices as hopes for de-escalation in the Middle East gained traction.

That momentum has carried into the new week after reports this morning that the United States (US) and Iran have now agreed on the full text of a Memorandum of Understanding (MoU), with the deal scheduled to be signed in Switzerland this Friday, 19 June.

The agreement includes a 60-day ceasefire extension, reopening of the Strait of Hormuz within 30 days, lifting of the US naval blockade, and commitments to discuss sanctions relief and the release of frozen funds.

The initial euphoria from the news sent US equity futures soaring, while the safe-haven US dollar eased lower across the board. In the energy space, West Texas Intermediate (WTI) crude oil futures came under significant further pressure, falling around 5% to the $80 mark, extending last week’s 6.60% decline.

For the AUD, this potent combination of improved risk appetite and strong gains in base metals, think gold, copper and iron ore, has provided a solid tailwind for the Aussie, propelling the pair to an intraday high of 0.7088, not far above where it trades this afternoon at 0.7085 (+0.58%).

Looking ahead to this week, the key drivers for AUD/USD will be tomorrow’s Reserve Bank of Australia (RBA) interest rate meeting (previewed below) and Thursday morning’s Federal Open Market Committee (FOMC) interest rate meeting. Beyond these crucial central bank events, traders will remain vigilant for any fresh developments out of the Middle East, especially ahead of the official MoU signing in Switzerland on Friday.

RBA interest rate decision

Date: Tuesday, 16 June at 2.30pm AEST

At its May meeting, the Reserve Bank of Australia (RBA) raised the official cash rate by 25 basis points (bp) to 4.35% in an 8-1 vote. This was the third consecutive hike this year and fully unwound the 75 bp of cuts delivered in 2025.

In the accompanying statement, the Board noted that inflation had picked up materially due to capacity pressures, with the Middle East conflict now adding a clear near-term impulse through sharply higher fuel and related commodity prices. They also noted signs that many firms are passing on cost pressures, and short-term inflation expectations have risen further.

In the post-meeting press conference, Governor Bullock sounded more dovish and emphasised that the three hikes had put the RBA in a good position to ‘observe now what happens to the war and what happens to employment’.

The Governor highlighted that the Board has more space to balance both growth and inflation risks, while stressing the need for a growth slowdown to prevent cost pressures from becoming entrenched in inflation expectations.

Since that meeting, incoming data has generally been softer. The labour market has shown early signs of easing, with unemployment ticking higher to 4.5% and employment growth moderating. Headline inflation has been pushed up by energy costs, but underlying measures have been less worrying than feared. Gross domestic product (GDP) growth in the first quarter (Q1) came in below expectations, while both consumer and business confidence have remained weak.

The unpopular Federal Budget delivered earlier this month has further weighed on sentiment, with households and businesses viewing the measures as adding to cost-of-living pressures rather than providing meaningful relief.

Markets are currently pricing in almost no chance of a move tomorrow, with the cash rate expected to remain at 4.35%. Attention will instead centre on the accompanying statement, which is expected to sound hawkish, and Governor Bullock’s press conference for any hints around the likelihood of further tightening later in the year.

The interest rate market starts the week pricing in 1 bp of rate hikes for tomorrow’s meeting, with a cumulative 13 bp of RBA rate hikes priced for the remainder of 2026, down from 24 basis points this time last week.

RBA cash rate chart

AUD/USD technical analysis

Technically, the head-and-shoulders topping pattern we highlighted on X here in early June has played out well, with the pair reaching and breaching the first downside target, the psychologically important 0.7000 level.

While the pair remains below the broken neckline at 0.7080 -  0.7000, there is scope for the move lower to extend towards the measured head and shoulders top projection around 0.6875.

That said, a sustained break back above 0.7080/00ish would signal that the pullback is complete at last week’s 0.6977 low and the broader uptrend has resumed, with the potential for AUD/USD to retest the 0.7277 record high of early May 2026.

AUD/USD daily candlestick chart

• _{Source: TradingView. The figures stated are as of 15 June 2026 Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}