The Australian dollar remains under pressure against a resurgent US dollar amid persistent Fed rate hike expectations and geopolitical tensions.
The AUD/USD pair trades near mid-0.6900s, failing to extend a late rebound from an over two-week low around 0.6920. The US dollar’s recovery from a one-week low, following Wednesday’s FOMC decision, weighs on the pair, leaving it nearly unchanged for the day but with a bearish near-term bias.
Volatile oil prices and escalating US-Iran tensions keep Federal Reserve rate hike bets alive, supporting the safe-haven USD. Recent US strikes against Iran, in response to missile attacks on American forces, and joint US-Saudi operations in Iraq heighten regional conflict risks. Reports of potential Houthi fees on Red Sea shipping and US-Iran standoffs over the Strait of Hormuz further stoke energy supply disruption fears.
Higher crude prices fuel concerns over energy-driven inflation, reinforcing expectations of prolonged Fed tightening. The AUD’s weakness reflects broader USD strength amid these macroeconomic and geopolitical pressures.