AUD/USD stabilizes above 200-day SMA as Iran strike contained, Powell testimony in focus

• AUD/USD reclaims the 200-day Simple Moving Average at 0.6422 after early weakness tied to Iran-US tensions.
• AUD/USD steadies despite the launch of Iranian missiles at US bases in Qatar.
• Attention turns to monetary policy as Fed Chair Jerome Powell prepares to address Congress.

The Australian Dollar (AUD) is holding steady against the United States Dollar (USD) on Monday after markets absorbed fresh geopolitical tensions involving Iran. Risk sentiment briefly deteriorated following Tehran's missile launch toward United States military bases in Qatar. However, media versions that all projectiles were intercepted and caused no casualties quickly calmed markets. 

With immediate threats fading, traders refocused on economic fundamentals, lifting AUD/USD back above its 200-day Simple Moving Average (SMA). Attention now shifts to Tuesday's Congressional testimony by Federal Reserve Chair Jerome Powell, which could clarify the central bank's outlook on inflation, growth, and geopolitical risk.

Supporting the US Dollar on Monday was stronger-than-expected data from the United States, as indicated by the S&P Global Purchasing Managers' Index (PMI) for June. The Manufacturing PMI held at 52, beating forecasts of 51, while the Services PMI dipped slightly to 53.1 from 53.7--but remains in expansion territory. The data pointed to ongoing resilience in the US economy and helped anchor Treasury yields.

Australia's own PMI release, published on Sunday evening, failed to generate a meaningful reaction in the AUD. Markets remained far more focused on geopolitical headlines and evolving expectations around US monetary policy. The Federal Reserve's latest Summary of Economic Projections signaled two rate cuts this year. However, should Powell adopt a more cautious or hawkish tone, it may delay easing expectations and weigh further on AUD/USD. Given its close ties to global trade and commodity demand--particularly from China--the Australian Dollar remains exposed to both geopolitical risk and shifts in external demand conditions.

AUD/USD technical analysis

AUD/USD is attempting to stabilize above the 200-day Simple Moving Average (SMA) at 0.6422 after briefly breaching the lower bound of a rising wedge pattern. 

The pair also found support near the 50.0% Fibonacci retracement level of the decline from September to April at 0.6428.

AUD/USD daily chart

Immediate resistance is located at 0.6450, aligning with wedge resistance and a recent intraday high. A break above this level could open the path to 0.6549, the 67.8% Fibonacci retracement, followed by 0.6722 as a potential medium-term upside target aligned with the 78.6% retracement level. On the downside, support remains firm at 0.6422, followed by the 100-day SMA at 0.6362 and the 38.2% Fibonacci level at 0.6306.

The Relative Strength Index (RSI) hovers near 48, indicating that momentum is approaching the neutral zone. A firm daily close above 0.6450 would favor further upside, while a failure to hold above 0.6422 may expose AUD/USD to fresh losses, targeting 0.6360.