AUD/USD has seen a decline as the Australian Dollar weakens in response to inflation data that fell short of expectations. Australia’s CPI increased by 4.2% year-over-year, falling short of the 4.4% consensus and decelerating from March’s 4.6% rate. The US Dollar is facing challenges as the demand for safe-haven assets diminishes, with traders expressing optimism for a potential agreement between the US and Iran, despite ongoing regional tensions. AUD/USD continues to build on its upward momentum for the second consecutive day, currently trading near 0.7160 during the Asian session on Wednesday. The pair declines as the Australian Dollar weakens after the release of domestic inflation data.
The Australian Bureau of Statistics reported on Wednesday that the Consumer Price Index increased by 4.2% year-over-year, which is lower than the market consensus of 4.4%. It decreased from 4.6% in the 12 months leading up to March 2026. The monthly Consumer Price Index registered at 0.4% in April, a decrease from the prior reading of 1.1%. The RBA Trimmed Mean CPI for April increased by 0.3% on a monthly basis and 3.4% on an annual basis. The potential decline of the AUD/USD pair may be limited as the US Dollar experiences a slight decrease due to diminishing safe-haven demand.
Traders maintain optimism that an agreement between the United States and Iran is still achievable, despite the resurgence of tensions in the Middle East. Iran’s foreign ministry has denounced the recent US airstrikes in the southern Hormozgan province, characterising them as a “gross violation” of a fragile ceasefire that has been in place for seven weeks. The statement came in response to reports from Iranian media indicating that explosions were heard throughout the region early Tuesday morning. Iranian Supreme Leader Mojtaba Khamenei stated that Gulf powers will cease to act as a protective barrier for US bases, indicating that the US will no longer enjoy a secure position in the region.
The US military has confirmed the execution of self-defence strikes in southern Iran. In response, Iran’s Revolutionary Guard asserted that it aimed at an American F-35 fighter jet and multiple drones that purportedly breached Iranian airspace. IRGC also indicated that it maintained the “legitimate and definite” right to respond to any violations of the ceasefire by the US.