The AUD/USD currency pair extended its decline for a fifth consecutive session, slipping 0.42% on Monday and settling near 0.6850, marking a drop of over 300 pips from its year-to-date high close to 0.7190 set in mid-March [1]. This move brought the pair to a two-month low, with price action characterized by weak upside momentum and a mildly bearish bias, as spot trades below both the 200-period and 50-day exponential moving averages [1]. The US Dollar Index (DXY) rallied to the 100.50 region, supported by safe-haven demand following hawkish remarks from US President Donald Trump regarding Iran, which heightened geopolitical tensions and risk aversion in the markets [2]. The USD was the strongest against the British Pound, gaining 0.56%, and rose 0.32% against the Australian Dollar [2].
The Reserve Bank of Australia (RBA) recently hiked its cash rate by 25 basis points to 4.10% in a narrow 5-4 split decision, marking the second consecutive increase [1]. Market participants are closely watching Tuesday's release of the RBA meeting minutes for signals on the Board's appetite for a third straight hike in May [1]. RBA Assistant Governor Christopher Kent warned that a prolonged conflict-driven supply shock from the Middle East war could lift both inflation and long-term expectations, potentially requiring a more restrictive policy stance [1]. Meanwhile, the Federal Reserve held its federal funds rate at 3.50% to 3.75% at its March meeting, with the updated dot plot still pointing to one cut this year. Fed Chair Powell noted that inflation is not coming down as quickly as hoped, and the implications of the Middle East conflict remain uncertain [1].
Market participants are bracing for a dense economic calendar, including the Institute for Supply Management (ISM) Manufacturing PMI on Wednesday and Non-Farm Payrolls (NFP) on Friday, with consensus at 55K after the prior month's negative print [1]. Liquidity is expected to be thin due to Good Friday in both Australia and the US, potentially increasing volatility around the NFP release [1].
Technical analysis indicates immediate resistance for AUD/USD at the 0.6855–0.6860 band, with initial support at 0.6844 and further downside targets at 0.6835 and 0.6825 [1]. The near-term bias remains bearish, and price action is grinding lower in tight ranges [1].
West Texas Intermediate (WTI) Oil surged for four days in a row, trading near $103.20 per barrel, driven by Iran's continued closure of the Strait of Hormuz [2]. Gold trades near the $4,515 region, maintaining a firm tone amid safe-haven demand despite a strong US Dollar [2].
CONCLUSION
AUD/USD has come under sustained pressure, reaching a two-month low as the US Dollar rallies on geopolitical tensions and risk aversion. With key economic releases and central bank signals on the horizon, volatility is expected to remain elevated. The market is closely watching for further developments in both monetary policy and geopolitical events.