Australian Dollar rebounds ahead of US CPI as hopes for peace in Iran drive Oil lower

• Improved risk appetite lifts AUD/USD 0.88% to 0.6924.
• Unconfirmed reports of US-Iran diplomatic progress send WTI nearly 4.50% lower.
• Ahead of US CPI, the probability of a December Fed rate rise reaches 82%.

With US Consumer Price Index (CPI) data due, investors are preparing for the release as mounting speculation that Washington and Tehran may be nearing an agreement weighs on the US Dollar. The Australian Dollar has reversed direction to advance 0.88%, with AUD/USD trading at 0.6924.

AUD/USD recovers as falling oil prices weigh on the US Dollar before US CPI

After US President Donald Trump said it was “highly unlikely” that he would order further strikes on Iran, Wall Street closed Monday’s session higher.

Reports carried on newswires, but not confirmed by major outlets, stated: “US-Iran nuclear talks reportedly revived,” while Al Arabiya cited sources describing a Qatari-Pakistan proposal as an initial step towards a possible resolution of the conflict. The agreement indicates that the US has accepted uranium enrichment in Iran of up to 3.67%.

Oil prices fell sharply on that news, leaving West Texas Intermediate (WTI) down nearly 4.50% at $86.37.

Hawkish remarks came from Fed speakers in the US. Richmond Fed President Thomas Barkin said the risks to the US central bank’s dual mandate were concentrated on inflation. Chicago Fed President Austan Goolsbee, meanwhile, repeated that services inflation had picked up over the past few months, making it harder to argue that elevated prices were solely the result of tariffs.

October’s New York Fed Survey of Consumer Expectations put one-year inflation expectations at an unchanged 3.9%. Expectations over three years stood at 3.3%, while the five-year measure was also unchanged, at 3%.

According to the CME Fed Watch Tool, last week’s Nonfarm Payrolls report raised the probability of a Federal Reserve rate increase at its December meeting. The likelihood now stands at 82%, compared with 76% last Friday.

Tuesday brings the release of the US Consumer Price Index (CPI), with annual inflation expected to increase to 3.9% YoY from 3.7%. The forecast for core CPI is a rise to 2.8% YoY from 2.6%.

Australia’s economic calendar is otherwise light, with November’s Westpac Consumer Confidence release scheduled.

AUD/USD Price Forecast: Pair remains under pressure below key averages

Trading at 0.6922 on the daily chart, AUD/USD continues to retreat below its main simple moving averages, leaving the near-term bias bearish. Overhead resistance comes from the latest 50/100/200-day simple moving averages, grouped around 0.7040. However, the pair remains supported by a series of rising trend lines originating between 0.6673 and 0.6897, pointing to a corrective setback within a broadly constructive structure. At 41.8, the Relative Strength Index (14) remains below its midpoint, signalling persistent downward pressure without yet indicating oversold conditions.

The cluster of three simple moving averages around 0.7040 forms the first upside hurdle, followed by horizontal resistance at 0.7198. Further away, the longer-term falling trend line starting at 0.8015 remains an obstacle. Below current prices, immediate support centres on the rising trend-line pivots at 0.6897. Subsequent trend-line support lies at 0.6865 and 0.6833, with a deeper structural floor provided by the older ascending trend line originating at 0.6673.

(The technical analysis of this story was written with the help of an AI tool. Know more.)