AUDUSD on the edge as the market awaits a US-Iran truce

The Australian dollar is losing ground amid labour market weakness. At the moment, the price is testing the 0.7130 level. Find more details in our analysis for 22 May 2026.

AUDUSD forecast: key takeaways

• Australia’s unemployment rate rose to 4.5%, the highest reading since November 2021, above expectations of 4.3%
• Employment fell by 18,600, while the market expected an increase of 17,500
• The market is awaiting news from the Persian Gulf region
• AUDUSD forecast for 22 May 2026: 0.7090 and 0.7210

Fundamental analysis

Today’s AUDUSD forecast shows that the Australian dollar is continuing its correction, with weak domestic data pushing it lower. However, global risk appetite and hopes for a truce between the US and Iran are preventing the pair from plummeting. On Friday morning, quotes are testing the 0.7130 level.

The main event of the week for Australia was the troubling April labour market report, which forced the market to drastically revise Reserve Bank of Australia rate expectations. The unemployment rate rose to 4.5%, the highest level since November 2021, exceeding the forecast of 4.3%.

Employment unexpectedly fell by 18,600, while the market had anticipated growth of 17,500, marking the first decline in employment over the past five months.

The likelihood of an RBA rate hike at the June meeting has fallen from nearly 50% to below 12%. Investors have started to price in possible rate cuts in the second half of the year, which is a bearish signal for the AUD.

The market is awaiting news from the Persian Gulf region. The pair’s next move will depend on which factor prevails: domestic economic weakness or global risk appetite. Weak employment data and growing Fed rate expectations are pushing the pair lower, but hopes for a truce in the Strait of Hormuz are keeping it supported through global risk appetite. Technically, the pair is compressed like a spring, and any news trigger could spark a sharp price swing.

Technical outlook

On the H4 chart, the AUDUSD pair formed an Inverted Hammer reversal pattern near the lower Bollinger Band. At this stage, quotes remain within an ascending channel and could continue the upward wave after the correction as the pattern signal plays out. In this case, the upside target could be the 0.7210 resistance level.

The AUDUSD forecast also takes into account another market scenario in which quotes may continue the correction and move towards the nearest support level at 0.7090 before growth.

AUDUSD overview

• Asset: AUDUSD
• Timeframe: H4 (Intraday)
• Trend: bullish
• Key resistance levels: 0.7210 and 0.7320
• Key support levels: 0.7090 and 0.6945

AUDUSD trading scenarios for today

Main scenario (Buy Stop)

A breakout and consolidation above the 0.7210 resistance level would open the door for continued upward momentum. Possible USD weakness would provide additional support for the upside scenario.

• Buy Stop: 0.7210
• Take Profit: 0.7320
• Stop Loss: 0.7180

Alternative scenario (Sell Stop)

Consolidation below 0.7090 would indicate the return of sellers and USD strength. In this case, quotes could decline towards 0.6945.

• Sell Stop: 0.7090
• Take Profit: 0.6945
• Stop Loss: 0.7120

Risk factors

The risk factors for the Australian dollar remain further strengthening in the US dollar amid more hawkish Fed rhetoric, heightened geopolitical tensions in the Middle East, and signals of RBA monetary easing.

Summary

The Australian dollar lost ground following the Australian employment data release. AUDUSD technical analysis suggests growth towards 0.7210 after the correction.

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