AUD/USD slipped to near 0.6890 on Thursday as risk appetite weakened and the US Dollar gained. This followed rising Middle East conflict and demand for safe-haven assets.
US President Donald Trump said the US would intensify military action against Iran and that two to three more weeks of fighting were likely. He ruled out immediate talks, while separate reports said Iran was also unwilling to pursue diplomacy.
Middle East Tensions And Safe Haven Demand
Trump said the Strait of Hormuz would “naturally reopen” after the conflict. Iran said control of the Strait remained in its hands alongside Oman.
Oil rose towards $111 per barrel amid supply concerns linked to the Strait of Hormuz closure. Stocks, bonds and gold fell during the move.
On the 4-hour chart, AUD/USD was at 0.6891 after rebounding from around 0.6860. Price held above the 20-period SMA near 0.6889, while the 100-period SMA was near 0.6995.
The RSI rose towards 48 after earlier sub-30 readings. Support levels were 0.6886, 0.6866 and 0.6859, while resistance was 0.6897 and 0.6920.
The technical analysis in the report was produced with help from an AI tool.
Options And Hedging Ideas
We remember last year when the conflict in the Middle East sent the US Dollar soaring and pushed AUD/USD down toward 0.6890. That period showed how quickly geopolitical flare-ups can cause a broad liquidation of assets as investors flee to safety. The surge in oil to over $110 a barrel was a painful reminder of how vulnerable supply chains are.
As of today, April 2, 2026, the market seems to be ignoring similar risks brewing, with the CBOE Volatility Index (VIX) sitting quietly near 15. This suggests complacency, making it a good time to consider buying protection before it gets expensive. Given the memory of last year’s rapid escalation, we see this low volatility as an opportunity, not a sign of permanent stability.
For traders, this means looking at put options on the AUD/USD pair, which is currently hovering around 0.6550. Last year’s drop shows there is a precedent for a sharp decline, and a break below the 0.6500 level could trigger a rapid move lower. These puts can serve as a direct hedge against a surge in the US Dollar, which remains the ultimate safe haven.
The US Dollar Index (DXY) is currently strong, trading near 105, but we saw how quickly it can rally further during a crisis. We should be positioned for another leg up in the dollar if global tensions worsen. Using derivatives to establish long USD positions against a basket of currencies could offer protection for broader portfolios.
Oil is another key area to watch, as last year’s events proved. While West Texas Intermediate (WTI) crude is now trading around a more modest $85 per barrel, that is still an elevated level reflecting persistent supply-side anxieties. Call options on crude oil are a direct way to position for a potential supply shock that could send prices back toward the $100 mark.
