AUD/USD climbs to fresh weekly highs above 0.6500 amid a risk-on mood

The Aussie Dollar has appreciated more than 2.3% on risk appetite.
Hopes of peace in the Middle East have sent safe havens and the US Dollar tumbling.
The focus today is on Fed Chairman Powell as calls for a rate cut increase.

Guillermo Alcala FXStreet

The Australian Dollar is one of the strongest performers among major currencies on Tuesday. The Aussie has rallied more than 2.3% from Monday’s lows buoyed by a higher appetite for risk after the Iran-Israel ceasefire, to reach one-week highs, above 0.6500.

US President Trump boosted investors’ optimism on Monday, announcing an agreement between Israel and Iran to cease all hostilities. Oil plunged on the news, and safe-haven assets like the US Dollar tumbled to the benefit of riskier-perceived currencies like the AUD.

The Fed returns to the focus

Beyond that, the Fed Vice Chair for Supervision, Michelle Bowman, affirmed that the effect of tariffs on inflation is likely to be smaller than expected and that the bank should consider cutting interest rates as soon as July.

These comments echo the views expressed by Christopher Waller on Friday and highlight a divergence on the Federal Reserve’s committee. Investors have ramped up bets on rate cuts in the next months, which is adding pressure on the US Dollar
Australian business activity improves.

In this context, the focus today is on Fed Chairman Powell, who will have to defend his wait-and-see policy in his Testimony to Congress, due later today. Investors will be looking for signs of a tone change to confirm hopes of further rate cuts in July or September.

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