Australian Dollar declines from two-month highs as Hormuz tensions lift the US Dollar

• AUD/USD gives back an early bid to trade just below its opening level, marginally lower on the day.
• The US Dollar firms a touch as fresh Strait of Hormuz tensions support safe-haven demand.
• Iran says the waterway stays shut until the US meets its conditions, and a vessel was struck on Tuesday.

AUD/USD trades just below 0.7100 on Tuesday, a touch lower for the day and sliding from the two-month highs reached on Monday. The pair opened with a firmer tone and pushed toward 0.7119 early on, but the bid faded through the session, and by the middle of the American trading session it sits just under its opening level.

The move owes little to Australian data and almost everything to geopolitics. The US Dollar (USD) has clawed back a little ground as tensions around the Strait of Hormuz flare again, keeping a modest safe-haven bid under the Greenback and weighing on risk-sensitive currencies like the Aussie.

Iran’s top negotiator and parliament speaker, Mohammad Bagher Qalibaf, said the Strait of Hormuz will stay closed until Washington meets the terms of an interim deal signed in June lifting its naval blockade of Iranian ports, removing oil sanctions, releasing frozen assets and halting military operations on all fronts. The memorandum of understanding expired on Monday, and US President Donald Trump said he is not seeking an extension.

A United Kingdom (UK) Maritime Trade Operations (UKMTO) agency reported early Tuesday that a vessel was struck by an “unknown projectile” while transiting the Strait, damaging its engine room and injuring a crew member. Trump, for his part, said there are no talks scheduled with Iran and that the US naval blockade remains in full force, and he reportedly told Fox News he would strike Oman if it gets in the way of his administration’s dealings with Tehran

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.7095, holding a mildly bullish bias as it stays above both the 20-period Simple Moving Average (SMA) at 0.7092 and the 100-period SMA at 0.7038. The pair is consolidating just under a dense topside band, with momentum neutral-to-positive as the 14-period Relative Strength Index (RSI) hovers around 54, suggesting buyers retain control but lack a strong push so far.

On the topside, immediate resistance is seen at 0.7098, followed by 0.7102 and then 0.7111, before a higher cap emerges near 0.7120. On the downside, initial support is provided by the short-term 20-period SMA at 0.7092, with a more significant floor coming in at the 100-period SMA around 0.7038; a sustained break below this latter level would weaken the current constructive tone.

(The technical analysis of this story was written with the help of an AI tool. Know more.)