Australian dollar faces make-or-
break moment this Thursday

Geopolitical and tariff pressures lead to AUD/USD slip from six-month high

Australian dollar/United States dollar (AUD/USD) finished marginally lower last week at 0.6487, down 0.09%, retreating from the fresh six-month high of 0.6546 reached earlier in the week. 

Its retreat followed risk-off flows triggered by Israel’s strike on Iran and former United States (US) President Donald Trump’s announcement that Washington would begin issuing letters to trading partners outlining new tariff rates over the next fortnight.

Risk sentiment improves as US futures rally

While the situation in the Middle East remains volatile, risk sentiment has improved at the start of the week, with US 500 (S&P 500) equity futures trading nearly 1% higher at 6039.

The rebound appears supported by reports of Israel’s success in targeting Iranian nuclear facilities, air defences, missile production, and senior military leaders - prompting speculation that the conflict may resolve faster than previously anticipated.

China concerns re-emerge

Despite the improvement in risk sentiment, AUD/USD is trading fractionally lower today at .6479 (-0.12%), weighed down by the latest batch of weak Chinese economic data. 

New home prices across 70 major Chinese cities declined 3.5% year-on-year (YoY) in May, the 23rd consecutive month of annual falls. Meanwhile, industrial production and fixed-asset investment also softened last month, suggesting that China's post-Covid-19 recovery remains unconvincing.

How AUD/USD tracks for the remainder of this week will depend on:

• Geopolitical updates
• Tariff developments
• Outcome of 'Super Thursday', which includes a Federal Reserve (Fed) interest rate meeting and an update on the Australian labour market previewed below.

Australian employment

Date: Thursday, 19 June at 11.30am (AEST)

In April, the Australian economy added 89,000 jobs - nearly four times the market’s forecast of 25,000. The unemployment rate held steady at 4.1%, while the participation rate rose to 67.1% from 66.8%.

Despite the strength of April’s labour force report, the Reserve Bank of Australia (RBA) proceeded with a 25 basis point (bp) interest rate cut at its following Board meeting. However, the solid jobs result likely influenced the central bank to avoid a larger 50 bp cut, especially with inflation now within the RBA’s target band and external risks mounting.

For May, expectations are for a 20,000 job gain and for the unemployment rate to remain at 4.1%. Temporary hires related to the Fed election pose upside and downside risks to both metrics. Unless employment data substantially beats expectations, markets are anticipating another 25 bp rate cut on 8 July, which would lower the official cash rate to 3.60%.

As of Monday, the interest rate market was pricing in a 72% probability of a July cut, with cumulative easing of 75 bp projected by year-end.

AU unemployment rate chart

AUD/USD technical analysis

There is no change to our technical view.

After completing a triangle-style 'ABCDE' five-wave correction in early April at the 0.6389 high, AUD/USD dropped to a low of 0.5912 on 9 April. From there, it rebounded back above 0.6500 in early May, leaving a V-shaped bottom, often seen at medium-term lows.

AUD/USD has spent the past month consolidating its rebound from the April lows in a range between 0.6350 and 0.6540 - either side of the 200-day moving average (MA), currently at 0.6433.

After the current consolidation period is completed (which may include a dip back towards 0.6350ish), we anticipate AUD/USD to extend its gains towards medium-term resistance at 0.6730 - 0.6750. This includes the 200-week MA and the downtrend line from the 0.8007 high of February 2021.

AUD/USD daily chart

• _{Source: TradingView. The figures stated are as of 16 June 2025. 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.}