Australian Dollar opens gap down as US, Iran fail to reach peace deal

AUD/USD recovers slightly after a gap-down open but remains in negative territory, trading around 0.7010 during the Asian hours on Monday. The pair weakened as risk aversion rises after US Vice President JD Vance said Washington and Tehran failed to reach a peace agreement in Islamabad following 21 hours of talks.

US Vice-President Vance noted negotiations had yet to produce a mutually acceptable deal, emphasizing the need for firm assurances that Iran will not pursue nuclear weapons. Meanwhile, US President Donald Trump said the US would begin “blockading” all ships entering or leaving the Strait of Hormuz.

On Iran’s side, Parliament Speaker Mohammad Bagher Ghalibaf said despite “constructive initiatives,” the US failed to gain the Iranian delegation’s trust, leaving the decision with Washington.

Rising energy costs have also fueled inflation concerns, with Australia’s monthly inflation gauge hitting a record 1.3% in March, signaling renewed price pressures since late 2025. The Reserve Bank of Australia (RBA) has already raised rates by 50 basis points to 4.10%, and markets now expect another hike in May.

As of April 10, the ASX 30 Day Interbank Cash Rate Futures May 2026 contract traded at 95.765, indicating a 64% probability of a rate hike to 4.35% at the next RBA meeting.