The Australian Dollar (AUD) remained resilient near a two-month high against the US Dollar (USD) on Tuesday, with the AUD/USD pair trading around 0.7115, up 0.1% on the day and close to Monday’s peak of 0.7129, its highest level in over two months [1]. The pair's advance was limited as the US Dollar found support from rising oil prices, which have fueled concerns about a potential resurgence in US inflation and could prompt the Federal Reserve (Fed) to maintain a restrictive monetary policy stance for longer [1]. Geopolitical tensions between the US and Iran, particularly regarding the Strait of Hormuz, have also contributed to renewed demand for the US Dollar, with escalating tensions in the Middle East pushing oil prices to a two-week high [1].
Investors are exercising caution ahead of the release of the Federal Open Market Committee (FOMC) Minutes on Wednesday, which could provide insights into Fed officials’ views on inflation risks and the future path of US interest rates [1]. On the Australian side, the hawkish stance of the Reserve Bank of Australia (RBA) continues to support the AUD, with RBA Governor Michele Bullock emphasizing that the Board had considered both keeping rates unchanged and raising them at the latest policy meeting [1].
Market participants are also awaiting Australian employment data for July, set to be released on Thursday, which could offer further clues about the strength of the labor market and influence expectations for the RBA’s next policy moves [1]. Technical analysis shows AUD/USD trading at 0.7113, maintaining a mildly bullish near-term bias above key moving averages and support levels, with the Relative Strength Index (RSI) around 58 indicating positive but not overstretched momentum [1].
CONCLUSION
The Australian Dollar remains supported by a hawkish RBA and technical strength, but faces headwinds from a potentially resurgent US Dollar amid rising oil prices and geopolitical tensions. Investors are closely watching upcoming FOMC Minutes and Australian employment data for further direction.