AUD/USD Recovers as Geopolitical Fears Ease Before US Retail Sales

Australian Dollar Rebounds as US Dollar Weakens Ahead of Retail Sales Data

The Australian Dollar (AUD) regained strength against the US Dollar (USD) on Tuesday, reversing earlier losses as investors responded to signs of de-escalation in the Israel-Iran conflict and awaited the release of the US Retail Sales report for May.

Risk Sentiment Improves on Diplomatic Moves

AUD/USD climbed following news that Iran had appealed to several regional powers—Oman, Qatar, and Saudi Arabia—to pressure US President Donald Trump into brokering an immediate ceasefire with Israel. The request, reported by Reuters, suggests growing momentum for diplomatic resolution, boosting risk appetite and the risk-sensitive AUD.

Additionally, the tone in markets turned more constructive after Canadian Prime Minister Mark Carney confirmed progress with Trump toward resolving US-Canada tariff issues within 30 days.

Focus Shifts to US Retail Sales

Markets are now focused on the upcoming US Retail Sales data for May, set for release later Tuesday. The data is expected to influence the Federal Reserve’s outlook, adding further significance to the AUD/USD pair's short-term trajectory.

G7 Statement on Iran

In a joint statement, G7 leaders reiterated:

“We have been consistently clear that Iran can never have a nuclear weapon,” adding that a peaceful resolution could lead to broader de-escalation in the Middle East.

This official line further contributed to calming market nerves and supported global equities and commodities—factors generally positive for the Australian Dollar.

Conclusion

With geopolitical risks easing and US economic data on the horizon, AUD/USD could continue to benefit from improving market sentiment. However, any reversal in diplomacy or disappointing US data could quickly shift momentum back in favor of the Greenback.