Buying AUDUSD with target of 0.66 amid upward trend and geopolitical instability

AUDUSD is exhibiting heightened volatility amid geopolitical events. On Friday, the pair dropped to 0.64551 as Middle East conflict escalation triggered risk-off sentiment. However, by Monday and Tuesday, it staged a recovery, erasing losses and climbing to 0.65332 as investors tempered concerns about the conflict expanding into a broader confrontation.

Geopolitics served as the primary market driver. Escalating Middle East tensions initially boosted demand for safe-haven assets, temporarily dampening appetite for the Australian dollar. However, reports of potential negotiations between conflicting parties helped stabilize trader sentiment, fueling AUDUSD's recovery.

In the Australian domestic market, attention is focused on the Reserve Bank's interest rate decision on July 8. Markets estimate a 90% probability of a rate cut, pointing to moderate inflation growth and weak consumer spending data. At the same time, labor market resilience may restrain aggressive monetary policy easing.

The pair is finding support from rising oil prices linked to potential supply disruptions. As an energy exporter, Australia benefits from higher commodity prices, though conflicting signals emerge from global demand fluctuations and a weakening American dollar.

The upcoming key event will be the US Federal Reserve meeting scheduled for this Wednesday. The regulator's interest rate decision and updated United States economic projections will critically influence the currency pair's direction. If the Fed signal imminent policy easing, it would weaken the dollar and bolster AUDUSD.

The AUDUSD pair maintains an upward trend on the daily timeframe, with prices holding firmly above the exponential moving averages EMA (20) and EMA (50), establishing a solid foundation for potential further gains. The key resistance zone is situated around 0.65300–0.65500, where previous local peaks have formed. The RSI (61), remaining within neutral territory without showing overbought conditions, which reinforces the likelihood of continued upward momentum. However, a close below the EMA (20) could trigger a pullback toward the 0.64300 level. 

Current recommendation:

Buy AUDUSD at the current price. Take profit – 0.66000. Stop loss – 0.64800.