Australian Dollar Drops As Hormuz Strikes Spark US Dollar Rush

The Australian Dollar retreats to two-day lows during the week, down 0.39%, as the US Dollar surges amid rising tensions in the Middle East. At the time of writing, the AUD/USD trades at 0.6928, having reached a daily high of 0.6961.

AUD/USD falls as Middle East tensions revive safe-haven Dollar demand

Tensions around the Strait of Hormuz had increased, as the frail US-Iran agreement entered a second round of hostilities on Tuesday. During the overlap between the Asian and European sessions, newswires reported that two vessels were attacked. In the meantime, Washington retaliated, reimposing sanctions on Iran’s Oil and the US CENTCOM reported that they were hitting Iranian weapon launch sites, air defences, and that more strikes are expected to last for hours, the AP reported.

Therefore, market mood shifted sour, and the Greenback is advancing, about to challenge two-day highs. As of writing, the US Dollar Index (DXY), which tracks the performance of the buck’s value against a basket of six currencies, is up 0.26%, at 101.12.

The US economic docket featured the Goods and Services Trade Balance in May, which showed the trade deficit widened below estimates but exceeded April’s figure. Meanwhile, the NY Fed Survey of Consumer Expectations showed that households expect higher prices, with one-year inflation expectations rising from 3.5% to 3.7% in June.

Given the geopolitical backdrop and the rise in energy prices and inflation expectations, traders see a 100% chance of a Federal Reserve interest rate hike in 2026, according to Prime Terminal data.

In Australia, the economic docket remains absent, yet traders would be focused on changes in market sentiment, which could boost the appetite for the Aussie Dollar.

Meanwhile, the Reserve Bank of Australia (RBA) had already raised rates thrice in 2026. In the last meeting minutes, the central bank adopted a more neutral stance, but it remains open to raising interest rates if needed.

Ahead, this week, the US economic schedule will feature the FOMC's last meeting minutes alongside Initial Jobless Claims for the week ending July 4.

AUD/USD Price Forecast: Technical outlook

AUD/USD daily chart

In the daily chart, AUD/USD trades at 0.6928, keeping a bearish near‑term bias as spot holds well beneath the latest simple triple moving average at 0.7086 and a series of previously rising trend lines that now sit overhead between roughly 0.7002 and 0.7111. The Relative Strength Index (14) around 40 leans mildly bearish, suggesting that downside pressure persists, even if the pair is not yet in oversold territory.

With no clear structural support levels derived from the provided indicators below the current price, traders will likely focus on the topside, where initial resistance emerges near 0.7002 from the latest upward trend‑line sequence, followed by a dense cap formed by clustered broken supports and the triple simple moving average between 0.7086 and 0.7111. Above that, a longer‑term downward resistance line anchored near 0.8015 marks a more distant barrier that would need to be overcome to neutralize the broader bearish technical tone.