AUD/USD Slumps on Strong USD and Geopolitical Tensions

The AUD/USD pair is trading at around 0.6970 after slipping due to follow-through selling following the previous day's failure to break above the 0.7000 psychological mark.

The US Dollar remains strong, buoyed by optimism over a potential US-Iran diplomacy fading after Saudi Arabia, Jordan and Iraq reported drone attacks on Monday.

This geopolitical risk premium is keeping the safe-haven Greenback in high demand, exerting downward pressure on the AUD/USD pair.

Despite this, traders are cautious ahead of the two-day FOMC policy meeting starting later today, which may keep them from placing aggressive bets.