AUD/USD Forecast: Aussie Bulls Defy Geopolitical Chaos to Test 0.7200

We’re watching the Australian dollar adopt a sudden, front-footed stance despite the ongoing high-stakes US-Iran negotiations. While crude oil remains stubbornly pinned above $100, AUD/USD is sprinting, acting as a high-beta proxy for global risk before any signatures have hit a treaty. The currency market is effectively front-running a diplomatic breakthrough that could finally end this nine-week energy war.

Diplomacy Drains the Dollar’s Safe-Haven Bid

A primary catalyst for the Aussie’s resilience is the deflation of the Dollar Index (DXY). Reports that Tehran has handed Washington a new proposal via Pakistan to reopen the Strait of Hormuz have sent the DXY slipping toward 98.27. It’s a massive tailwind. While the White House remains cautious with President Trump reportedly unhappy that the plan avoids the nuclear issue, investors are hungry for risk. AUD/USD is the primary beneficiary of this rotation. We’re in the midst of a significant shift where hope is a more powerful driver than the physical disruption in the Gulf.

RBA Tightening Expectations Anchor the Floor

Don’t let the risk-on noise distract you from the bedrock. The Reserve Bank of Australia is trapped by energy-driven inflation that refuses to budge. With headline CPI expected to increase in Wednesday’s report, the yield advantage is becoming a magnet for carry traders. I noticed the Australia 10Y vs US 10Y bond spread has widened to a little over 70.0 basis points. Higher yields mean a stronger floor. If the inflation print comes in hot, it almost certainly locks in a third consecutive 25bp rate hike to 4.35%, fully erasing the cuts delivered in 2025.

Comparative yield curves for Australia and the USA

Line chart comparing Australian and US yield curves

Source: TradingView

Renko Bricks Confirm Short-Term Bullish Momentum

The Renko with a 0.001 brick size keeps AUD/USD in a bullish structure with a positive bias, despite the latest pullback from the 0.7180–0.7183 area. Price remains comfortably above the rising 500 SMA at 0.70433, while the recent bounce from 0.71136 confirms that buyers are still defending higher support. The Supertrend setup has flipped back toward short-term pressure, with price currently near 0.7152, but this looks more like a pause after a strong advance than a full trend reversal. Momentum is cooling, not collapsing: RSI sits near 49.33, while the Z-score SMA remains positive at 1.22, showing that upside pressure is still present even as buyers lose some short-term force. A recovery above 0.7175–0.7183 would put bulls back in control and expose 0.7221, while a break below 0.71136 would weaken the setup and bring the rising SMA zone back into focus.

Renko Signals Overall Bullish Trend Despite Short-Term Decline

0.001-brick Renko chart of AUD/USD showing price action trading above the 500-SMA

Source: TradingView

Technical Outlook: Bulls Own the Timeframes

Current Trend Direction: Bullish

Bias: Positive

Key Support Levels: 0.6833, 0.7140,

Key Resistance Levels: 0.7275,0.7405

Medium Term Path: I expect the AUD/USD to maintain its upward trajectory toward the 0.72–0.7405 zone, fueled by a cocktail of short-covering and a hawkish RBA. Rallies may stall near 0.7200 psychological levels, but as long as the 0.7114 pivotal support holds, the bulls control the tape. Diplomacy is the driver now.