Stronger-than-expected US jobs data and escalating geopolitical tensions in the Middle East have driven demand for the US Dollar (USD), resulting in declines for both the Euro and Australian Dollar against the Greenback during early Asian trading on Monday [1][2]. The US Bureau of Labor Statistics reported that the US economy added 178,000 jobs in March 2026, surpassing market expectations of a 60,000 gain and following a revised decline of 133,000 jobs in the previous month [1][2]. The US unemployment rate edged lower to 4.3% in March from 4.4% in February, also beating estimates [1][2].
Geopolitical risks intensified after US President Donald Trump set a new deadline for Iran to reopen the Strait of Hormuz by Tuesday, threatening to bomb Iranian power plants and infrastructure if Tehran does not comply [1][2]. Iranian officials responded by stating they would reciprocate any attacks and keep the strait blocked until compensation for war damages is received [1]. These developments have further supported the USD as a safe-haven asset, pressuring both EUR/USD and AUD/USD pairs [1][2].
The EUR/USD pair traded with mild gains around 1.1515 but remained under pressure due to the strong US data and Middle East uncertainty [1]. The European Central Bank (ECB) has maintained a hawkish stance, with President Christine Lagarde and other Governing Council members emphasizing that policy will remain restrictive until inflation sustainably returns to the 2% target, which may help limit further losses for the Euro [1].
The AUD/USD pair extended its decline to near 0.6885, with market participants also focusing on the upcoming US ISM Services PMI data later on Monday [2]. Rising oil prices and a tight US labor market have led to market expectations of another potential rate hike at the Federal Reserve's May meeting [2]. Westpac analysts expect the Reserve Bank of Australia (RBA) to deliver three further rate hikes in 2026, potentially raising the cash rate to 4.85%, a level not seen since November 2008 [2].
CONCLUSION
Stronger US jobs data and heightened Middle East tensions have boosted the US Dollar, pressuring both the Euro and Australian Dollar. While the ECB's hawkish stance may help limit Euro losses, the AUD remains under pressure despite expectations for further RBA rate hikes. Market sentiment remains cautious amid ongoing geopolitical risks and robust US economic indicators.