Bullish view
Buy the AUD/USD pair and set a take-profit at 0.7300.
Add a stop-loss at 0.7000.
Timeline: 1-3 days.
Bearish view
Sell the AUD/USD pair and set a take-profit at 0.7000.
Add a stop-loss at 0.7300.
The AUD/USD exchange rate pulled back on Monday morning, erasing some of the gains made on Friday when it soared to its highest level since June 2022 as geopolitical tensions eased. The pair was trading at 0.7167 a few points below the year-to-date high of 0.7225. It remains 21% above its lowest level last year.
Geopolitical Tensions Remain
The AUD/USD pair pulled back as the US dollar and crude oil prices rose as the tensions between the US and Iran resumed. On Friday, Iran and the US announced that they had reached a deal to reopen the crucial Strait of Hormuz.
The two issued different statements, with Trump saying that the blockade on Iranian oil would remain until the US collected the enriched uranium. Iran then warned that his statement made a few mistakes. As a result, Iran announced that it had shut down the Strait, pushing many tankers to return.
Crude oil prices rebounded on Monday morning as investors priced in more volatility in the country. Still, this could be a negotiation strategy as the two sides work towards a lasting peace.
The AUD/USD exchange rate will next react to the upcoming developments on Iran. It will also react to some key macro data from the United States. For example, the US will release the latest retail sales report on Tuesday. Economists expect the data to show that the headline retail sales rose by 2.4% in March, down sharply from the previous 3.7%.
The US will also publish the latest pending home sales data on the same day. There will be no macro data from Australia this week. The most important came out on Thursday when the Bureau of Statistics published relatively weak jobs data.
AUD/USD Technical Analysis
The weekly chart shows that the AUD/USD pair has been in an uptrend in the past few months. It crossed the important resistance level at 0.7185, its previous YTD high.
The pair has held steady above the 50-week moving average and is along the 61.8% Fibonacci Retracement level. It remains above the Ichimoku and Supertrend indicators.
Therefore, the most likely scenario is where the pair continues rising as bulls target the key resistance level at 0.7300. The alternative scenario is where the pair retreats to the psychological level at 0.700.