The Australian Dollar (AUD) is under significant pressure on Thursday, with AUD/USD dropping 0.6% amid rising geopolitical tensions. Investors are flocking to safe-haven assets as fears escalate over a broader conflict between Israel and Iran, especially after news reports revealed US officials are preparing for a possible military strike on Iran.

US President Donald Trump’s vague response when asked about American involvement in the conflict added to market anxiety, sparking a global risk-off mood. As a result, the risk-sensitive Aussie is one of the worst-performing major currencies today.

The AUD/USD pair is approaching the lower bound of its three-week range, hovering around the 0.6445–0.6455 zone — a support level that has held firm on June 3 and 13. A decisive break below this area could open the door to deeper losses.

Domestically, Australia’s labor market data offered little relief. While the unemployment rate held steady at 4.1%, the economy unexpectedly shed 2,500 jobs in May, raising concerns about a slowdown in employment growth. These figures are unlikely to shift the Reserve Bank of Australia’s (RBA) cautious monetary stance, further weakening the Aussie’s appeal.

On the US front, the Federal Reserve kept interest rates unchanged on Wednesday but maintained a hawkish bias in its dot plot, which still points to two rate cuts this year. However, Fed Chair Jerome Powell warned that inflationary risks from tariffs could persist, which helped the US Dollar rebound.

Trade Idea:

If AUD/USD breaks below 0.6445, a deeper move toward 0.6400 could follow. A sell-on-rally strategy near 0.6480 may be considered, with stops above 0.6510, targeting short-term risk-driven downside.