AUD/USD Recovers Above 0.6500 as Geopolitical Fears Ease and Risk Sentiment Improves

Risk Sentiment Lifts the Aussie as USD Softens

The Australian Dollar (AUD) is on a rebound, reclaiming ground above the 0.6500 level in early Monday trading. This comes after a risk-on shift in investor sentiment and a weakening US Dollar (USD), which is helping the AUD/USD pair erase Friday’s declines.

The pair is up nearly 0.45% intraday, as tensions in the Middle East conflict appear to be de-escalating slightly, reducing safe-haven demand for the USD and supporting risk-sensitive assets like the Aussie.

Iran-Israel Developments Ease Risk Aversion

Although Iran and Israel continue missile exchanges, markets are comforted by the absence of immediate threats to oil shipping routes, such as the Strait of Hormuz. The absence of escalation into a broader regional conflict has supported risk appetite, and emerging-market currencies are benefiting, including the AUD.

Statements from Iran’s Foreign Ministry regarding potential withdrawal from the nuclear Non-Proliferation Treaty have not significantly disrupted market confidence.

China Data Fails to Impress

Despite improving sentiment, China’s recent economic figures failed to provide additional support for the AUD. The mixed results have reinforced views that while the Chinese economy is stable, growth momentum may be slowing.

Still, Australian Dollar bulls are focusing more on global risk tone and USD weakness than domestic data.

What's Next for AUD/USD?

• Key resistance: 0.6535
• Support: 0.6460
• Geopolitical developments and risk sentiment remain the primary catalysts
• Watch for Fed and RBA communication later in the week

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