Australian Dollar consolidates near 0.7050, highest since June 17 amid reviving USD demand

The Australian Dollar found itself near 0.7050, marking its highest level since June 17, amid a surge in demand for the US Dollar. This increase in demand for USD stemmed from a lack of progress in breaking through the 100-day Simple Moving Average near 0.7000s and the supportive fundamentals that reinforced the case for a potential further appreciation of the AUD/USD pair.

Iran's rejection of the US Treasury Secretary's and President Trump's claims about the Strait of Hormuz remaining open under the new deal kept geopolitical risk premium in play, adding to the USD's appeal as a safe-haven currency and hindering the AUD/USD pair. However, the hope for a diplomatic resolution to the US-Iran war and expectations of a softer stance from the US Federal Reserve on interest rate hikes managed to alleviate the pressure on the USD bulls, which in turn supported the AUD/USD pair.

The optimistic rumors surrounding a potential US-Iran agreement contributed to a decline in crude oil prices, alleviating inflation concerns and discouraging further US rate hikes. However, the pair's upside potential remained limited due to poor China's RatingDog Services PMI, which fell to 50.4 in July, signifying a slowdown in service sector activity.

The focus then shifted to the US economic agenda, including the release of the ADP report on private-sector employment and the ISM Services PMI. The Nonfarm Payrolls (NFP) report on Friday and the eagerly awaited UK Consumer Price Index inflation data were also anticipated to influence USD demand and provide additional impetus to the AUD/USD pair during the North American session.