FX.co ★ Australian Dollar Rebounds from 2-Month Low

The Australian dollar climbed to around $0.692, rebounding from a two-month low, as hopes for a de-escalation of tensions in the Middle East supported risk appetite. Global sentiment improved after Trump indicated the US could end its military operations against Iran within two to three weeks and was scheduled to address the nation later in the day, stoking speculation of an impending wind-down in the conflict.

Still, uncertainty lingered amid reports that the US may send additional naval forces to the region, while ongoing concerns about the Strait of Hormuz kept oil prices elevated on fears of prolonged supply disruptions. The inflationary impact of higher energy costs continued to cloud the outlook, with analysts warning that sustained price pressures could keep inflation elevated for longer and intensify pressure on Australian interest rates.

The Reserve Bank of Australia, which lifted the cash rate to 4.10% in March, remained in the spotlight. Markets were pricing in roughly a 65% probability of another rate hike at its May meeting, although expectations for the eventual peak in rates had edged slightly lower.