AUD/USD Forecast: Aussie Dollar Sprints as Iran Peace Hopes Crush Dollar Demand

Risk is back. Traders are dumping the greenback as news of potential US–Iran talks in Pakistan circulates, effectively erasing the war premium that has stifled global markets since late February. While the physical crude market remains tight with barrels close to $100, the currency market is betting on a diplomatic breakthrough that reopens the Strait of Hormuz and restores some semblance of supply-chain sanity. I’ve watched the dollar index retreat to pre-war levels today. Investors are hungry for risk. AUD/USD, often the favorite proxy for global growth sentiment, is the primary beneficiary of this sudden pivot toward optimism. We’re in the midst of a massive short-covering rally.

Tight Labor Market Anchors the Rally

Underpinning this technical surge is a remarkably resilient domestic economy. ABS data shows that the Australian labor market remains on the tight side, with the unemployment rate holding steady at 4.3% in February and March. I believe this labor market strength is the RBA’s get-out-of-jail-free card. It allows them to keep the cash rate at 4.10%, or even higher, to combat the secondary inflationary wave from oil, providing the Aussie with a yield advantage that the market is just now starting to price in.

Labour Market Resilience

Australian unemployment remains near historic lows, supporting a hawkish RBA. Source: TradingView

Weekly Squeeze Defies Gravity

The overarching structure remains remarkably resilient despite the global chaos. Looking at the weekly timeframe, the AUD/USD pair has successfully navigated a brutal fundamental stress test, holding firmly above the long-term Supertrend floor at 0.67258 while systematically grinding through the short-term resistance pivot at 0.68521. Bears are looking for some place to hide. The current price action suggests that heavily capitalized institutional algorithms are defending the recovery from the 0.5509 lows. Momentum points upward. We’re targeting the 0.71875 ceiling next.

Weekly Squeeze Pivots to Highs

Aussie bulls defend the long-term Supertrend as risk appetite returns. Source: TradingView

Daily Bullish Setup

Buyers took the wheel and are driving up the hill. The daily chart reveals a V-shaped recovery directly off the 0.6833 structural pivot, a move so aggressive it forced the entire price complex back above the 21-EMA. That 21-EMA now acts as a dynamic floor, the road to monthly highs. The RSI has surged past 60, indicating that we aren’t even overbought yet despite this massive vertical climb. I love the technical symmetry here. The market absorbed the geopolitical shock, found its footing at the previous breakout zone, and is now punishing the late sellers who blindly chased the war headlines into a major demand pocket.

Daily 21-EMA Breakout

Momentum shifts positive as the 21-EMA flips from resistance to support. Source: TradingView

Renko Bricks Float Above the 500 SMA

Analyzing the 0.001-brick traditional Renko exposes an unbroken sequence of green continuation bricks that systematically triggered buy programs straight up from the lows. We’ve shattered the 500 SMA. That moving average, which previously capped rallies, has been left in the dust as the algorithmic squeeze intensifies. The oscillating 20-period Z-Score SMA has normalized above 1, providing statistical confirmation that the trend is healthy but a bit overextended. Still. Don’t fight this tape. The Supertrend is green, the RSI is constructive, and the path of least resistance remains definitively higher for the intraday swing trader.

Renko Algorithmic Breakout

Green bricks dominate as AUD/USD clears the 500-SMA barrier. Source: TradingView

The Verdict

Current Trend Direction: Bullish

Bias: Positive

Key Support Levels: 0.6725, 0.6833, 0.6852

Key Resistance Levels: 0.71875

Medium-Term Path: I expect the AUD/USD to maintain its upward trajectory toward the 0.71875 cycle ceiling, fueled by a cocktail of short-covering and renewed risk appetite, provided the daily 21-EMA successfully absorbs any profit-taking pullbacks. If we clear 0.71875, the doors open for a move toward 0.7300. Watch the Islamabad headlines closely. Diplomacy is the driver.