US-Iran Tensions Spark AUD/USD Weakness as USD Bulls Wait on NFP
A potential US-Iran peace deal's optimism has faded amid reports Iran is reviewing a plan to ban US and Israeli vessels from the Strait of Hormuz, prompting traders to price in geopolitical risk premium.
This development supports the safe-haven US Dollar (USD) and caps the AUD/USD pair. The Iranian Houthi allies' strike on a Saudi tanker in the Red Sea has fueled concerns about energy supply disruptions, leading to an overnight spike in crude oil prices and reviving inflation fears.
The outlook remains supportive of elevated US Treasury bond yields, which acts as a tailwind for the Greenback and keeps the AUD/USD pair depressed. USD bulls seem hesitant and look to the key US Nonfarm Payrolls (NFP) report for more cues about the Fed's future policy path.