Australian Dollar holds firm as Trump’s Iran comments reduce risk sentiment

• AUD/USD trades with a neutral tone as improved risk sentiment supports the Australian Dollar.
• Trump’s comments on Iran and the Strait of Hormuz helped ease market concerns.
• Investors await the first Fed decision under Kevin Warsh, with rates expected to remain unchanged.

The AUD/USD pair trades near 0.7070 with a neutral tone on Wednesday, as the Australian Dollar (AUD) benefits from improved risk sentiment following the latest developments in the US-Iran conflict.

Market mood improved partially after United States (US) President Donald Trump defended the ceasefire framework with Iran, saying the Strait of Hormuz had reopened but warning that bombing could resume if Tehran “acts up.”

Shipping data showed that several Iranian oil tankers had passed through the Strait of Hormuz following the US-Iran framework deal, adding to expectations that Middle East supply could return to the market. The prospect of lower energy prices supported risk-sensitive currencies such as the Aussie, although uncertainty remains high.

Meanwhile, investors remain cautious ahead of the Federal Reserve’s (Fed) June policy decision. The first Fed meeting led by Kevin Warsh is expected to end with interest rates unchanged in the 3.50%-3.75% range as policymakers continue to balance easing Oil-related inflation against still-elevated headline inflation and solid US economic activity.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.7070. The pair holds a mild bullish bias, trading above the 20-period Simple Moving Average (SMA) at 0.7064 but capped by the 100-period SMA at 0.7101. The Relative Strength Index (RSI) around 55 hints at steady, rather than impulsive, upside momentum as price grinds higher within a tight range.

On the topside, immediate resistance emerges at the temporary range high around 0.7074, with the 100-period SMA at 0.7101 acting as the next key hurdle if buyers extend the move. On the downside, initial support is seen at 0.7065, reinforced by the clustering of the 20-period SMA at 0.7064 and additional horizontal levels at 0.7058 and 0.7054, where a break would expose a deeper corrective pullback.

(The technical analysis of this story was written with the help of an AI tool.)