AUD/USD Falls Below 0.6500 Amid Middle East Tensions and US Dollar Strength

AUD/USD Slides to 0.6485 as Geopolitical Tensions Weigh on Market Sentiment

Monday – Asia: The AUD/USD currency pair extended losses, dropping to 0.6485 in early Asian trading. The move comes as escalating geopolitical tensions in the Middle East continue to favor the US Dollar (USD), acting as a major headwind for the Australian Dollar.

Middle East Tensions Boost USD Demand

Following a recent Israeli raid on Iranian nuclear and military sites, tensions have surged. Late Sunday night, Iran retaliated with a strike on Haifa, further escalating the situation. Iranian authorities have activated what they describe as the "fourth level of operation" against Israel, warning of firm retaliation against any perceived aggression.

"We will react firmly to any adventurism," Iranian officials said via semi-official Mehr News Agency.

China’s Data in Focus

While geopolitical factors dominate short-term price action, investors are awaiting China’s May Retail Sales and Industrial Production data, which is expected to provide further cues for AUD performance given Australia’s trade ties with China.

US Economic Data Overlooked

Despite better-than-expected US economic data — including an improvement in the Michigan Consumer Sentiment Index to 60.5, the first increase in six months — the focus remains on global risk aversion, which boosts safe-haven flows into the US Dollar.

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