Australian Dollar Weakens Over 1% as Risk Aversion Strengthens US Dollar

Australian Dollar Tumbles Over 1% Amid Geopolitical Tensions and Stronger USD

The Australian Dollar (AUD) slid sharply against the US Dollar (USD) in Friday’s trading session, losing over 1% intraday amid heightened geopolitical concerns and global risk aversion. The AUD/USD pair dipped below key technical levels as traders sought shelter in the greenback.

Middle East Escalation Fuels Safe-Haven Demand

Tensions escalated after Israel launched a preemptive strike on dozens of nuclear facilities across Iran, according to Israeli officials. Defense Minister Israel Katz declared a state of emergency, prompting market fears of a wider regional conflict.

“Israel bombed dozens of nuclear sites in Iran due to the existential threat posed by Tehran’s nuclear ambitions,” Axios reported.

Investors shifted capital toward safe-haven currencies like the USD, yen, and Swiss franc, further weakening risk-sensitive currencies like the AUD.

Weak US PPI and Trump’s Tariff Hike Add to Volatility

Adding to market nervousness, the US Producer Price Index (PPI) rose only 0.1% month-over-month in May, below the 0.2% forecast, suggesting a mild inflationary environment and potentially lower consumer demand in the near term.

Meanwhile, former President Donald Trump announced the reimposition and expansion of steel tariffs, effective June 23, on imported steel derivative products, including dishwashers, refrigerators, and washing machines. The move could reignite global trade concerns, further supporting the USD.

Related: USD/MXN Surges Amid Geopolitical Fears and Strong USD

AUD/USD Technical Overview

• Current Level: Below 0.6600
• Resistance: 0.6650 and 0.6725
• Support: 0.6540 and 0.6480

The pair remains in a downward trajectory, pressured by worsening sentiment and stronger demand for the USD.

Conclusion

With risk-off flows dominating the market due to Middle East conflict, a soft US inflation print, and renewed trade uncertainty, the Australian Dollar continues to face headwinds. Unless geopolitical tensions ease or risk appetite returns, AUD/USD may remain under pressure in the near term.