The Australian dollar stabilizes near a three-week high despite renewed USD strength and weaker China services data.
The AUD/USD pair consolidates around 0.7050, its highest level since June 17, but struggles to breach the 100-day SMA near mid-0.7000s. The pair shows limited movement following China’s July Services PMI, which fell to 50.4 from 54.1 in June, signaling slower service sector growth.
Renewed demand for the USD, driven by geopolitical tensions in the Middle East, caps the pair’s upside. Iran’s rejection of U.S. claims over the Strait of Hormuz keeps risk premiums elevated. However, hopes for a diplomatic resolution and reduced Fed rate-hike bets limit USD gains.
Oil prices dropped to a near four-week low on optimism over a potential U.S.-Iran deal, easing inflation concerns. This shift has led traders to scale back expectations for further Fed tightening, supporting the AUD/USD pair despite China’s weaker economic data.