AUD/USD price today slides below 0.71 as escalating geopolitical tensions in the Middle East and firm US economic data drive fresh demand for the US Dollar. The Australian Dollar weakened to 0.7083, down 0.37% in Monday trade, pressured by safe-haven flows and a repricing of Federal Reserve rate expectations.
The move follows sharp rhetoric from US President Donald Trump over the weekend, with threats of continued attacks on Iran for “four or five weeks” and warnings that a “big wave” in the conflict is yet to come. The renewed escalation has rattled global markets and boosted demand for the Greenback.
Safe-Haven Demand Lifts the US Dollar
The US Dollar Index (DXY) jumped 0.83% to 98.45, marking one of its strongest single-day gains in recent weeks. The flight to safety accelerated after reports that US and Israeli forces eliminated Iran’s Ayatollah Ali Khamenei, triggering retaliation from Tehran, including missile strikes targeting US bases and a UK airbase in Cyprus.
Risk-sensitive currencies such as the Australian Dollar typically struggle during periods of heightened geopolitical stress. The AUD’s strong correlation with global growth and commodity demand makes it particularly vulnerable when markets rotate toward defensive positioning.
ISM Data Reinforces US Economic Strength
Adding to the downward pressure on AUD/USD was a fresh batch of resilient US economic data. The ISM Manufacturing PMI came in at 52.4 for February, only slightly below January’s 52.6 and remaining in expansion territory for a second consecutive month.
More striking was the ISM Prices Paid index, which surged from 59 to 70.5 — its highest reading in three and a half years and the strongest level since October 2022. The spike underscores renewed inflationary pressures within the manufacturing sector.
According to the Institute for Supply Management, elevated input costs signal that inflation risks remain embedded in supply chains, complicating expectations for aggressive Federal Reserve easing this year.
Markets Trim Federal Reserve Easing Bets
Interest rate markets have responded quickly. As recently as Friday, traders had priced in roughly 60 basis points of Fed easing for 2026. That expectation has now been reduced to 48 basis points, reflecting a less dovish policy outlook.
The combination of geopolitical instability and resilient US data has created a powerful tailwind for the Dollar. Higher oil prices — another by-product of Middle East tensions — add further inflationary concerns, reinforcing demand for US assets.
Focus Turns to RBA Governor Michele Bullock
Attention now shifts to the Reserve Bank of Australia, with Governor Michele Bullock scheduled to speak amid the heightened volatility. Investors will closely monitor any comments regarding inflation dynamics, global tensions, and the domestic policy outlook.
With the Australian economy facing slower growth momentum and exposure to global trade cycles, the RBA’s tone could shape near-term direction for the currency.
In the United States, Federal Reserve officials John Williams and Jeffrey Schmid are also set to deliver remarks, which may further influence rate expectations.
AUD/USD Technical Outlook
Despite the latest pullback, the broader daily structure still reflects an established uptrend. The pair continues to trade comfortably above a rising cluster of simple moving averages anchored in the 0.6800 region.
Momentum indicators remain constructive. The Relative Strength Index (RSI) holds near 62, indicating bullish momentum without entering overbought territory.
Immediate support sits near 0.7090, aligned with the inner ascending trendline. A sustained break below that area exposes the 0.7050 level, followed by stronger demand around 0.7000, where previous reaction lows converge.
On the upside, resistance is positioned near 0.7125, the recent weekly high, with a broader technical barrier around 0.7170. A daily close above 0.7170 would open a path toward 0.7250. Failure to defend 0.7000 would weaken the bullish structure and shift focus back toward the mid-0.69 range.
For now, geopolitical headlines and US rate expectations remain the dominant catalysts. As long as safe-haven flows persist and Fed easing bets continue to be scaled back, the Australian Dollar may remain under pressure against the US Dollar.
