• AUD/USD slipped around 0.4% on Monday, though the pair managed to recover from a sharper decline seen shortly after the open as volatility remained elevated.
• Risk sentiment weakened after U.S.-Iran peace talks collapsed over the weekend, fueling fears of a renewed escalation in the conflict and driving demand for safe-haven assets at the expense of risk-sensitive currencies like the Australian dollar.
• Concerns intensified further after the U.S. signaled a blockade of the Strait of Hormuz, pushing energy prices sharply higher, with WTI crude surging over 8%, adding to global inflation worries and dampening investor confidence.
• Despite the partial rebound, AUD/USD’s upside momentum may prove limited, with gains likely to stall near the 0.7040 level, which marks Monday’s opening range and a key near-term resistance zone.
• Market participants will also be watching remarks from Reserve Bank of Australia Deputy Governor Andrew Hauser, who is scheduled to speak in New York later Monday, for any signals on the policy outlook.
• Immediate resistance is located at 0.7054(38.2%fib), any close above will push the pair towards 0.7070 (April 10 high).
• Support is seen at 0.7022(50%fib) and break below could take the pair towards 0.7007(Lower BB)
Recommendation: Good to sell around 0.7060 with stop loss of 0.7100, and target price of 0.7000
