US Dollar Index (DXY) flatlines near 101.70; awaits US CPI report amid Iran uncertainty

The Australian Dollar experienced a turnaround, increasing by 0.88% as the US Dollar lost strength due to growing speculation about a potential deal between Washington and Tehran. The AUD/USD exchange rate reached 0.6924. Wall Street ended Monday's trading session with gains as US President Donald Trump stated it was "highly unlikely" he would order strikes on Iran.

There were reports of revived US-Iran nuclear talks, with a Qatari-Pakistan proposal reportedly being the first step towards resolving the conflict. The deal allowed Iran to enrich uranium up to 3.67%, which led to a 4.50% drop in oil prices, bringing West Texas Intermediate (WTI) down to $86.37. Fed speakers in the US were cautious, with Richmond Fed President Thomas Barkin emphasizing inflation risks, while Chicago Fed President Austan Goolsbee noted that services inflation had accelerated in recent months.

The New York Fed Survey of Consumer Expectations for October revealed that one-year inflation expectations remained steady at 3.9%, three years at 3.3%, and five years at 3%. The US Nonfarm Payrolls report last week boosted the likelihood of a Federal Reserve rate increase at the December meeting, currently at 82%, up from 76% last Friday.

Ahead of the US Consumer Price Index (CPI) release on Tuesday, which is expected to rise from 3.7% to 3.9% YoY, core CPI is anticipated to increase from 2.6% to 2.8% YoY. In Australia, the main focus is the release of the Westpac Consumer Confidence for November. The AUD/USD pair traded at 0.6922 and displayed a bearish sentiment, with the 50/100/200-day simple moving averages clustering around 0.7040, creating a cap above the current spot price.

The Relative Strength Index (14) stood at 41.8, indicating lingering downside pressure but not yet oversold conditions. The technical analysis suggests that resistance lies at the triple simple moving average cluster near 0.7040 and the horizontal barrier at 0.7198, while the long-term downward trend line starting at 0.8015 remains a distant obstacle.

Support can be found around the upward trend-line pivots at 0.6897, followed by secondary trend-line floors at 0.6865 and 0.6833, and a deeper structural base from the older rising trend line at 0.6673.