The Australian dollar weakened during the Asian trading session on Tuesday, declining against most major currencies. The AUD/USD pair trended lower, currently trading near 0.6970 with an intraday loss of approximately 0.6%. Risk aversion sentiment was reignited after Iran firmly denied engaging in peace talks with the United States, starkly contrasting with earlier optimistic remarks from U.S. President Donald Trump, thereby putting pressure on the Australian dollar. The decline in risk appetite bolstered the U.S. dollar, with the Dollar Index edging up to around 99.40, gaining about 0.2% for the day. As a typical risk-sensitive currency, the Australian dollar often faces significant selling pressure during periods of heightened geopolitical uncertainty.

Geopolitical tensions resurfaced on Monday when President Trump announced he had directed the Department of Defense to suspend military strikes on Iranian power facilities for five days, stating that "very good and productive discussions" were underway with Tehran for a comprehensive resolution to Middle East hostilities. This initially eased market tensions, leading to a pullback in oil prices and a rebound in risk assets. However, Iran swiftly issued a strong rebuttal. Iranian Parliament Speaker Mohammad Bagher Qalibaf explicitly stated, "No negotiations have been held with the United States," and accused Trump of spreading false information to manipulate financial and oil markets. Official Iranian media also denied any direct or indirect dialogue, emphasizing that the conflict would continue until full damages were compensated. This reversal in stance prompted a rapid return of risk-off sentiment, supporting the U.S. dollar and weighing on the Australian dollar.

Compounding the geopolitical factors, domestic economic data from Australia provided additional drag on the Australian dollar. The preliminary S&P Global Purchasing Managers' Index (PMI) for March showed the Composite PMI plunging to 47.0, a significant drop from February's 52.4, marking the first contraction in 18 months. The Services Activity Index fell further to 46.6, while the Manufacturing PMI dipped slightly to 50.1. A Composite PMI reading below 50 indicates an overall contraction in business activity, primarily dragged down by a sharp decline in services output. Slower growth in new orders, weaker employment growth, and heightened concerns over supply chain disruptions amplified market doubts about Australia's economic growth prospects. Investors are focusing on Australia's February Consumer Price Index (CPI) data, scheduled for release on Wednesday. However, as this data does not fully reflect the recent surge in energy prices triggered by the Iran conflict, its actual impact on monetary policy expectations for the Reserve Bank of Australia (RBA) is anticipated to be limited.

In the short term, the Australian dollar faces dual pressures: persistent geopolitical risks and weak domestic economic data. Key support for AUD/USD is situated near the 0.6900 level, with a further decline potentially testing the psychological 0.6800 mark. Resistance above is seen in the 0.7050-0.7100 range. Over the medium to long term, the Australian dollar's trajectory will depend on developments in the Middle East situation, the global economic growth outlook, and the performance of commodity prices. Should the Iran conflict de-escalate, a recovery in risk sentiment would benefit the Australian dollar; conversely, prolonged tensions would continue to pressure the currency via energy prices and safe-haven demand. Traders should closely monitor U.S. economic data and RBA policy signals while maintaining robust risk management practices.

At 11:52 Beijing Time, the AUD/USD pair was trading at 0.6965/66.