Iran peace hopes push Oil lower as Australian Dollar rebounds ahead of US CPI

• Improved risk sentiment 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 hike climbs to 82%.

A recovery in risk appetite lifts the Australian Dollar 0.88%, reversing its earlier direction as the US Dollar retreats on mounting speculation that Washington and Tehran may be nearing a deal. With AUD/USD trading at 0.6924, investors are also preparing for the United States Consumer Price Index (CPI) release.

Can AUD/USD sustain its rebound as Oil slumps and the Dollar weakens before US CPI?

US equities closed higher on Monday after US President Donald Trump described the prospect of ordering fresh strikes on Iran as “highly unlikely”.

Reports on newswires carried the line “US-Iran nuclear talks reportedly revived,” although major outlets had not confirmed the news. Citing sources, Al Arabiya reported that a Qatari-Pakistan proposal marks an initial step towards a possible resolution of the conflict. Under the deal, the US agreed to permit uranium enrichment in Iran up to 3.67%.

Oil prices fell sharply on the latter development, leaving West Texas Intermediate (WTI) nearly 4.50% lower at $86.37.

Hawkish commentary came from Fed officials in the US. Richmond Fed President Thomas Barkin placed the risks on the inflation side of the US central bank’s dual mandate. Chicago Fed President Austan Goolsbee, meanwhile, repeated that services inflation had picked up over the past few months, making it harder to argue that high prices were driven solely by tariffs.

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

Following last week’s Nonfarm Payrolls report, the CME Fed Watch Tool put the probability of a Federal Reserve rate increase at the December meeting at 82%, compared with 76% last Friday.

Tuesday brings the US Consumer Price Index (CPI) release, with annual inflation expected to pick up to 3.9% YoY from 3.7%. The forecast for Core CPI is an increase to 2.8% YoY from 2.6%.

Australia’s economic calendar is relatively quiet, with November’s Westpac Consumer Confidence release due.

AUD/USD Price Forecast: What does the technical picture suggest?

The near-term bias remains bearish on the daily chart, where AUD/USD is trading at 0.6922 and extending its retreat below the major simple moving averages. Overhead resistance comes from the 50/100/200-day simple moving averages, which converge around 0.7040. However, the pair continues to rest on rising trend-line supports originating between 0.6673 and 0.6897, pointing to a corrective pullback within a broader constructive structure. At 41.8, the Relative Strength Index (14) remains below its midpoint, signalling persistent downside pressure without yet indicating oversold conditions.

The first hurdle for a recovery is the cluster of three simple moving averages around 0.7040, followed by horizontal resistance at 0.7198. Further away, the longer-term descending trend line drawn from 0.8015 remains an obstacle. Immediate support lies around the rising trend-line pivots at 0.6897. Below that, additional trend-line support sits at 0.6865 and 0.6833, followed by a deeper structural floor along the older ascending trend line originating at 0.6673.

(An AI tool assisted in preparing the technical analysis in this article. Learn more.)