The Aussie Dollar took a hit this week, and no, it wasn’t just about soft jobs data. A surge in global tension, specifically the Israel-Iran situation, rattled markets and triggered a flight to safety. When the world goes risk-off, the Australian Dollar usually ends up catching the flu.
Pair that with a disappointing employment report out of Australia, and you’ve got the perfect storm for AUD/USD weakness.
Here’s what’s moving the pair and what it means:
1. Jobs Data Disappoints
🇦🇺 Australia May employment fell by 2.5K, vastly missing consensus for a 25K gain. This was driven by a sharp 41.2K decline in part-time jobs, the largest fall since March 2024. Full-time employment rose 38.7K. The unemployment rate held steady at 4.1% (consensus 4.1%).
— #Augur Infinity (#@AugurInfinity)
2:39 AM • Jun 19, 2025
Australia’s labor market cooled sharply. Employment fell by 2.5K in May, a stark reversal from April’s 87.6K surge. While the unemployment rate stayed steady at 4.1%, the decline in hiring threw cold water on bullish AUD sentiment.
That miss added fuel to bets that the Reserve Bank of Australia may ease up on future tightening. And for traders? Less jobs = less rate hike fuel = softer AUD.
2. Geopolitics Drive Risk-Off
Tensions in the Middle East are back in the spotlight. Bloomberg and Reuters both reported that U.S. officials are prepping for a potential strike on Iran. Trump reportedly held back on green-lighting an attack, for now.
Risk-sensitive currencies like AUD often suffer when geopolitical heat rises. With investors flocking to the US Dollar as a safe haven, AUD/USD slid below 0.6500 again.
3. US Dollar Gains on Safe Haven Demand
The US Dollar Index popped to 99.00 as traders piled into the greenback. The Fed held interest rates steady at 4.5%, with Chair Powell reiterating a cautious stance, no cuts until inflation and labor cool off further.
Retail sales in the US dropped more than expected (-0.9% in May), but global turmoil outweighed the data miss. Traders stayed long USD as conflict risk took center stage.
4. China Growth Not Enough to Save AUD
China’s May retail sales rose 6.4% year-on-year, beating expectations, and industrial production was solid, but not enough to support Aussie bulls.
With China being Australia’s biggest trading partner, strong Chinese data usually props up the AUD. But right now, geopolitical fears and soft Aussie employment figures are drowning out any China tailwinds.
5. Technical Picture: Bulls on the Defensive
AUD/USD is trading around 0.6466 after breaking back below key support at 0.6500. The pair now sits below its 9-day EMA and is testing the ascending channel’s lower edge.
Immediate resistance is seen at 0.6500, followed by 0.6537. Beyond that, bulls would aim for 0.6600. On the downside, if 0.6460 breaks, the next major support is 0.6400, then 0.6345.
Here’s the Takeaway:
Geopolitics can eclipse fundamentals, and that’s exactly what’s happening to the Aussie. Even decent China data can’t offset war fears and a weak Aussie jobs print. For now, the risk-off tide is in charge, and the AUD is swimming upstream.
For us traders, let’s keep our eyes on 0.6460. That level’s a make-or-break for the bulls.
