Geopolitical tensions in the Strait of Hormuz drive safe-haven flows into the USD, pressuring the risk-sensitive Australian dollar.
AUD/USD slipped below 0.7100 on Tuesday, retreating from Monday’s two-month high of 0.7119. The pair opened higher but lost momentum as the session progressed, with no significant Australian data influencing the move.
The decline reflects broader USD strength amid renewed tensions in the Strait of Hormuz. Iran’s top officials warned the waterway would remain closed until the U.S. meets terms of a lapsed June deal, while a UK agency reported a vessel struck by a projectile in the area. The USD gained modestly as investors sought safety.
U.S. President Donald Trump dismissed talks with Iran and maintained the naval blockade, further elevating geopolitical risks. The Aussie, typically sensitive to risk sentiment, underperformed as the USD recovered ground.