AUD Stuck Near 0.7050 as RBA Support Fades Amid Geopolitical Tensions

The Australian Dollar (AUD) continues to trade in a tight band around 0.7050, pausing its pullback from the highest level since June 5. This sideways pattern is expected to persist until market participants receive a new catalyst for direction.

A hawkish stance from the Reserve Bank of Australia (RBA) and softer Federal Reserve hike expectations are supporting the AUD, while geopolitical risks underpin the US Dollar (USD). RBA Governor Michele Bullock recently highlighted that inflation risks remain tilted to the upside and stated that the board stands ready to raise rates again if price pressures do not show adequate progress lower.

However, market participants remain focused on inflation risks linked to volatile oil prices in the context of the US-Iran standoff. President Donald Trump said the US had total control over the Strait of Hormuz, while Iran reiterated its own control over this key shipping channel. These developments are keeping geopolitical risk elevated and acting as a tailwind for the safe-haven USD.