The Australian Dollar (AUD) advanced for the second consecutive day, with the AUD/USD pair trading around 0.7160 during early European hours on Monday. This upward movement is attributed to surging energy prices and growing expectations that the Reserve Bank of Australia (RBA) will raise interest rates in the near term [1].
Market participants are closely watching Australia's March Consumer Price Index (CPI) report, which is scheduled for release on Wednesday. The headline annual inflation rate is expected to rise to 4.7%, significantly above the RBA's 2–3% target range. An upside surprise in the CPI data could further reinforce market expectations of a 25-basis-point rate hike at the RBA's May 5 meeting. As of April 24, the ASX 30 Day Interbank Cash Rate Futures May 2026 contract was trading at 95.745, indicating a 74% probability of a rate increase to 4.35% at the upcoming RBA Board meeting [1].
The AUD/USD pair's gains also come as the US Dollar (USD) continues to decline, despite increased safe-haven demand amid geopolitical tensions. However, the downside for the USD may be limited due to ongoing conflict in the Middle East, with Israel and Hezbollah escalating attacks despite a US-brokered ceasefire extension [1].
Additionally, Bloomberg reported that Iran has presented the US with a new proposal to reopen the Strait of Hormuz and end the conflict, which includes delaying nuclear negotiations and extending the ceasefire to work toward a lasting resolution [1].
CONCLUSION
The Australian Dollar's recent gains are driven by surging energy prices and heightened expectations of an RBA rate hike, with markets focused on the upcoming CPI data for further direction. While geopolitical tensions provide some support to the US Dollar, the AUD remains buoyed by domestic economic factors and central bank policy outlook.