Australian Dollar Strengthens on Risk-On Sentiment, Eyes Fed Powell's Testimony
By tredu.com • 6/24/2025
Tredu
Australian Dollar Gains on Ceasefire Optimism, Awaits Fed Powell Clarity
June 25, 2025 – Forex Market News | Tredu.com
The Australian Dollar (AUD) posted gains for a second consecutive session, with the AUD/USD pair trading higher on Tuesday as market sentiment improved after a formal ceasefire agreement between Iran and Israel was confirmed by US President Donald Trump.
Geopolitical Calm Boosts Risk Appetite
Markets responded positively to the Middle East truce after Iran launched missiles at Al Udeid Air Base in Qatar on Monday. The assault was intercepted with no major damage, and Qatar confirmed the base had been evacuated in advance. Trump's late-Saturday announcement that Iran’s Fordow, Natanz, and Isfahan nuclear sites were destroyed added to geopolitical clarity.
Australian PMI Data Reduces Rate Cut Odds
In addition to the geopolitical relief, the S&P Global Australia PMI data delivered a surprise upside. Australia's private sector grew at its second-fastest rate in ten years, casting doubt over near-term rate cut expectations by the Reserve Bank of Australia (RBA). This strengthened the AUD and further boosted investor confidence.
Fed Dovish Signals and Powell's Upcoming Testimony
Meanwhile, Fed Governor Michelle Bowman hinted on Monday that rate cuts could arrive soon, assuming inflation remains under control. Markets are now turning their attention to Fed Chair Jerome Powell’s testimony for further direction on US monetary policy, which will directly influence USD performance against risk-linked currencies like the AUD.
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