AUD/USD climbs as Iran proposal boosts risk appetite

The Australian dollar rose to 0.7165 on Monday, April 27, after Iran offered a proposal to reopen the Strait of Hormuz. The news lifted risk appetite and focused traders on a potential breakout above 0.7211.

In early Asia trading the AUD/USD gained about 0.25%, recovering from a recent dip and trading above Friday’s swing low of 0.7120. U.S. equity futures pared earlier losses; the S&P 500 E-mini traded near unchanged while the Nasdaq 100 E-mini rose roughly 0.17% to an intraday high. The risk-on tone supported the currency pair.

Technically, the pair remains below its April 17 intraday high of 0.7222 after a corrective decline of about 1.6% within an uptrend that began on March 30. A clear break above 0.7211 would increase the chance of gains toward resistance at 0.7244, 0.7265 and the 0.7300 Fibonacci extension. An hourly close below the short-term pivot at 0.7090 would weaken the bullish view and could expose support near 0.7033, close to the 20- and 50-day moving averages.

The conflict between the United States and Iran entered its ninth week. An extended ceasefire announced last week without a set end date did not produce new talks, and continued blockages of the Strait of Hormuz have disrupted a major route for global oil shipments.

Data showed the AUD/USD has tightened its link to global equities. Since mid-March the 20-day rolling correlation with a broad global equities ETF rose to about 0.95 from roughly 0.62 at the end of March. That change has lessened the currency’s sensitivity to domestic monetary policy expectations, including hawkish guidance from the Reserve Bank of Australia, as traders weigh geopolitical developments and energy market pressures.

There has been no official statement from the U.S. administration on the proposal. Markets responded with a risk-on tone that erased earlier losses and supported the AUD’s recovery.