The Australian Dollar (AUD) is consolidating near its highest level since June 2022 against the US Dollar (USD), with AUD/USD trading above 0.7200 at the start of the week. This bullish momentum is underpinned by market expectations that the Reserve Bank of Australia (RBA) will deliver a third consecutive interest rate hike at its policy meeting on Tuesday, driven by a significant rise in headline inflation in March, attributed to global energy shocks and Middle East tensions [3][4]. The consensus for the upcoming RBA rate decision is a hike to 4.35%, up from the previous 4.1% [4]. Technical indicators for AUD/USD, including an RSI around 62 and a positive MACD histogram, suggest firm upside momentum, while the 100-period EMA at 0.7137 is seen as immediate support [4].
In cross-currency action, AUD/JPY has weakened below 113.00, trading near 112.95, as safe-haven demand for the Japanese Yen (JPY) increases amid uncertainty over Middle East tensions and the closure of the Strait of Hormuz. US President Donald Trump announced that the US will begin guiding ships through the Strait, which Iranian official Ebrahim Azizi called a violation of the ceasefire [3]. Despite the pullback, the broader uptrend in AUD/JPY remains intact, with technical support at 112.00 and resistance at 113.40 [3].
The Euro (EUR) has shown mixed performance. EUR/JPY trades near 183.90 after trimming earlier losses, maintaining a bearish near-term bias as it remains below both the 50-day and nine-day EMAs. The 14-day RSI at 38.75 indicates bearish momentum, with rallies likely to struggle unless the pair breaks above the 184.98 (50-day EMA) and 185.44 (nine-day EMA) resistance levels. Key support is seen at the 10-week low of 181.87 and the five-month low of 180.81 [1]. The Euro was the weakest against the New Zealand Dollar among major currencies, declining 0.23% against NZD and 0.11% against JPY on the day [1].
Meanwhile, EUR/USD holds above the 1.1700 level, with a modest bullish bias as it trades above the 200-period SMA on the 4-hour chart. The RSI is near 53, and the MACD remains slightly positive, indicating mild upside pressure. However, analysts caution that a sustained move above 1.1750 is needed for further gains, with resistance at 1.1847 and support at 1.1692 and 1.1648 [2].
Geopolitical developments, particularly in the Middle East, are influencing currency markets, with safe-haven flows supporting the Yen and the US Dollar, while expectations of tighter monetary policy are buoying the Australian Dollar. The upcoming RBA decision is a key event for AUD pairs, with market participants closely watching for confirmation of a rate hike and any forward guidance.
CONCLUSION
Currency markets are being shaped by a combination of geopolitical tensions and central bank policy expectations. The Australian Dollar is supported by anticipated RBA tightening, while the Yen and US Dollar benefit from safe-haven demand. The RBA's upcoming rate decision is likely to be a significant catalyst for further moves in AUD pairs.