Australian Dollar bulls remains on the sidelines as Iran risks support USD ahead of US NFP

The AUD/USD pair remains stable around 0.7030-0.7025 during the Asian session on Friday, as traders wait for the upcoming US Nonfarm Payrolls (NFP) report. However, the pair has failed to capitalize on the previous day's retracement from the June 17 peak and is expected to end the week flat amid mixed signals. The hope for a US-Iran peace deal appears to have diminished, as Iran is reportedly considering a plan to restrict US and Israeli vessels in the Strait of Hormuz.

If implemented, this would penalize nations that have harmed Iran and increase the risk premium, supporting the US Dollar (USD) and keeping the AUD/USD pair under pressure. Meanwhile, Iran's Houthi allies in Yemen attacked a Saudi tanker in the Red Sea, raising concerns about potential disruptions to energy supplies, which could trigger inflation and further bolster expectations of a US rate hike.

This, combined with a possible rate hike by the Reserve Bank of Australia (RBA) at its upcoming 11 August meeting, continues to weigh on the AUD/USD pair. Analysts at Standard Chartered predict that the RBA will maintain its cash rate at 4.35% in its 11 August meeting, citing steady Q2 trimmed mean inflation at 0.8% quarter-over-quarter, which is below their prior forecast of 0.9%.

This could signal that the RBA may not tighten policy further in the near term. The AUD/USD pair is currently consolidating between its 200-day Simple Moving Average (SMA) at 0.6923 and 100-day SMA at 0.7052, indicating a neutral near-term bias and a range-bound sentiment.