Aussie rebounds back toward highs
The Aussie dollar rebounded overnight but underperformed other major currencies as markets waited for the next development in the US–Iran war.
The key Strait of Hormuz remains closed, but new talks between the US and Iran are scheduled ahead of the potential ceasefire ending on Wednesday night US time (Thursday morning APAC time).
AUD/USD, while rebounding, ranked among the weakest G10 currencies overnight, with the pair flat on the session.
For the Aussie, initial support comes in near the 21-day EMA at 0.7059, followed by the 50-day EMA around 0.7008.
AUD/EUR has pushed toward a near one-month high, underlining continued weakness in the EUR.
In other markets, NZD/USD also recovered, up 0.1%.
USD weakens as Fed’s Waller outlines potential Iran outcomes
The US dollar was mostly weaker overnight as initial nervousness around the closure of the Strait of Hormuz gave way to renewed hopes for a peace deal.
USD/SGD and USD/CNH both gave up early gains to end flat. USD/JPY rose 0.1%, with the Japanese yen the only G10 currency to end lower.
US Federal Reserve Governor Christopher Waller outlined two clear paths as tensions between the US and Iran remain elevated.
If the Strait of Hormuz reopens and shipping returns to normal, he would likely ignore a short-lived jump in energy prices and keep his focus on a weakening jobs market. If the conflict drags on, higher energy costs could spill over into everyday prices.
In that case, the Fed may need to keep rates unchanged, with inflation risks taking priority over softer hiring.
PBOC stands pat on lending rates
China’s central bank left loan prime rates unchanged for an eleventh straight month. The one-year LPR remains at 3.0%, while the five-year rate stays at 3.5%, in line with expectations. Policymakers pointed to steady growth and easing price pressures at home, even as rising Middle East tensions add to external risks.
Officials reiterated plans to keep policy supportive and “moderately loose” this year.
EUR/CNH is edging toward a one-week low, highlighting ongoing EUR weakness.
USD/CNH is trading about 0.2% above its recent low near 6.8059, last seen on April 14. The next resistance area sits near the 21-day EMA at 6.8502, followed by the 50-day EMA around 6.8830.
With USD/CNH near the bottom of its recent range and RSI close to oversold territory, some USD buyers may look for a short-term bounce.
Aussie back near four-year highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 20 – 25 April
All times AEST
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
