Higher oil prices and US-Iran tensions lift the USD, pressuring the Australian dollar near key resistance levels.
The AUD/USD pair dipped after failing to break above 0.7100, as the USD recovered from a two-month low. Gains in the greenback followed rising oil prices and geopolitical risks, fueling expectations of a potential Fed rate hike later this year.
Investors remain cautious amid inflation concerns tied to elevated energy costs and escalating US-Iran tensions. The Fed’s upcoming FOMC minutes, due Wednesday, will be closely watched for further policy clues. The pair’s retreat extends Monday’s pullback from its highest level since early June.
Market focus shifts to the Fed’s tone, with traders assessing whether inflation pressures will prompt a more aggressive stance. The USD’s rebound acts as a headwind for risk-sensitive currencies like the AUD.