The pair gains modestly as safe-haven demand for the USD eases amid optimism over a potential US-Iran agreement.
The AUD/USD pair opened the week with a slight bullish gap, trading above mid-0.7100s during the Asian session. A weaker US Dollar (USD), driven by hopes of a US-Iran peace deal, supported the pair’s recovery from its lowest level since April 14.
Despite the optimism, key disputes over sanctions and Iran’s nuclear program persist, capping broader market gains. Expectations of a Federal Reserve rate hike later this year also limit deeper USD losses, restraining further upside for AUD/USD.
Technically, the pair has breached the 38.2% Fibonacci retracement level of its recent pullback and is testing the 200-period SMA on the 4-hour chart. A break above this level could target the 50% retracement near 0.7150.