The Australian dollar advanced on Friday, moving toward 0.7200 against the U.S. dollar, after authorities confirmed the Strait of Hormuz had fully reopened, easing oil supply fears and weakening demand for safe-haven currencies. The U.S. dollar slipped broadly as the key shipping channel resumed normal operations.
Strait “fully open” eases oil and currency market stress
Officials said the Strait is “fully open and ready for full passage,” a shift that calmed energy markets unsettled by recent disruptions. The news reduced expectations of prolonged supply constraints and improved risk appetite across currency and commodity markets.
U.S. President Donald Trump noted that while shipping has restarted, temporary naval measures linked to Iran remain in place as talks continue. Markets read the statement as a step toward lower regional tensions after weeks of restricted traffic through the vital oil route.
Risk-sensitive aussie gains as safe-haven flows unwind
The Australian dollar, which typically reacts sharply to changes in risk sentiment and commodity prices, drew support from the improved outlook for global oil flows. The U.S. dollar’s decline reflected the unwinding of earlier safe-haven flows that had built up amid geopolitical uncertainty.
Analysts said more stable energy supply chains could relieve upward pressure on oil prices and trim short-term inflation risks. If energy costs continue to ease, traders see scope for a slower pace of monetary tightening by major central banks.
Technical picture: AUD/USD maintains upward bias
On the four-hour chart, AUD/USD traded near 0.7194, holding above the 20-period simple moving average at 0.7159 and the 100-period simple moving average at 0.6996. The structure remains tilted higher, with momentum supported by a 14-period Relative Strength Index slightly above 70.
Immediate resistance is clustered around 0.7194, with the next key level at 0.7221. Support sits at 0.7171, followed by 0.7162 and 0.7159, forming a near-term floor. A deeper pullback toward 0.6996 would put the broader uptrend under pressure.
Oil prices retreat as ceasefire hopes build
The move in currencies reflects a straightforward shift away from the perceived safety of the U.S. dollar toward assets tied to global growth, such as the Australian dollar. Optimism over a possible U.S.-Iran ceasefire has pushed West Texas Intermediate crude toward $91 a barrel, with some trades reported below $82, reversing a sharp prior-session rally.
The rapid pullback in oil prices has underpinned the improved mood across markets, with lower energy costs seen as supportive for the global economic outlook.
Focus turns to diplomacy and next upside targets
Market attention is now fixed on the next steps in diplomatic talks, with some reports pointing to a second round of discussions as early as this weekend. The main sticking point remains the scale of Iran’s uranium enrichment program. Any concrete progress could fuel further gains in risk-sensitive currencies.
Technically, a sustained break above the 0.7185 area would strengthen the case for a continued push higher in AUD/USD, with some desks eyeing the 0.7300 region as a potential next target.
Inflation backdrop remains challenging
The geopolitical relief comes against a mixed macro backdrop. While softer oil prices could ease forward-looking inflation expectations, recent data show price pressures remain elevated.
In the United States, the annual inflation rate for the year to March climbed to 3.3%, driven in part by a 12.5% jump in energy costs over the period. Australia’s February inflation reading stood at 3.7%, keeping pressure on its central bank to remain vigilant.
Central bank paths diverge
Monetary policy signals are becoming a key driver for currency markets.
The Reserve Bank of Australia lifted its cash rate to 4.10% in March and is widely expected to move again, with market pricing suggesting a roughly 72% probability of another hike at its May 5 meeting.
By contrast, the Federal Reserve is broadly expected to keep its policy rate unchanged in the 3.5%–3.75% range at its April 28–29 meeting. This potential policy divergence, combined with easing geopolitical risk and moderating oil prices, is reinforcing support for the Australian dollar against the U.S. dollar as traders reassess relative yield and growth prospects.
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