The Australian Dollar (AUD) advanced by approximately 0.25% against the US Dollar (USD) on Thursday, trading at 0.7158 after rebounding from daily lows of 0.7097. This move was driven by reports that the US and Iran reached a 60-day memorandum of understanding aimed at extending the ceasefire and initiating talks on Iran’s nuclear program, though the agreement still requires final approval from President Donald Trump and senior leadership on both sides [1]. The US Dollar Index (DXY) fell 0.25% to 98.97, reflecting improved risk appetite following the Axios report [1].
US economic data contributed to the USD’s weakness. The US economy grew by just 1.6% in Q1 2026, below the previous estimate of 2%, according to the US Bureau of Economic Analysis. Initial Jobless Claims rose to 215,000 for the week ending May 23, surpassing expectations of 211,000 [1]. Inflation remained elevated, with the Core PCE Price Index rising to 3.3% year-over-year in April from 3.2%, and headline inflation at 3.8% year-over-year, up from March’s 3.5%. Elevated energy prices, tied to the US-Iran war, were cited as a contributing factor [1].
Federal Reserve officials offered mixed commentary: St. Louis Fed President Alberto Musalem warned that a rate hike could be necessary if inflation does not cool, while New York Fed President John Williams stated that current policy is appropriately positioned given the outlook [1].
In Australia, household spending fell 1.1% in April, according to the Australian Bureau of Statistics, a sharper decline than economists’ forecast of a 0.4% contraction [1]. The AUD/USD technical outlook remains modestly bullish, with the pair trading above key moving averages and trend-line support, and the Relative Strength Index (14) hovering near 51, indicating steady but not overstretched upside momentum [1].
Looking ahead, the Australian economic calendar is light, while US traders await further Federal Reserve commentary before the central bank enters its blackout period [1].
CONCLUSION
The Australian Dollar’s gains were supported by optimism over a potential US-Iran deal and weaker-than-expected US economic data, which pressured the US Dollar. Despite mixed signals from Federal Reserve officials and a decline in Australian household spending, the AUD/USD maintains a modestly bullish technical outlook. Market participants are now focused on upcoming Fed speeches for further direction.