The Australian Dollar strengthened against the US Dollar on Friday, with the AUD/USD pair climbing toward the 0.6960 level as a firmer Chinese Yuan and a softer Greenback supported investor sentiment. China's currency reached a one-week high after the People's Bank of China set a stronger-than-expected daily reference rate, providing a boost to the Aussie due to Australia's close economic ties with China.
Despite the gains, rising geopolitical tensions in the Middle East limited the pair's upside. Fresh uncertainty surrounding the US-Iran situation reduced overall market risk appetite, encouraging investors to remain cautious even as the US Dollar weakened.
From a technical perspective, market momentum has improved, with the currency pair trading above key short-term moving averages. However, traders remain focused on upcoming economic data that could determine the next major move.
Attention now shifts to next week's US Consumer Price Index (CPI) report and Australia's consumer inflation expectations survey. Stronger US inflation could support the Dollar by reinforcing expectations of tighter Federal Reserve policy, while weaker inflation may allow the Australian Dollar to extend its recent gains.
Despite the gains, rising geopolitical tensions in the Middle East limited the pair's upside. Fresh uncertainty surrounding the US-Iran situation reduced overall market risk appetite, encouraging investors to remain cautious even as the US Dollar weakened.
From a technical perspective, market momentum has improved, with the currency pair trading above key short-term moving averages. However, traders remain focused on upcoming economic data that could determine the next major move.
Attention now shifts to next week's US Consumer Price Index (CPI) report and Australia's consumer inflation expectations survey. Stronger US inflation could support the Dollar by reinforcing expectations of tighter Federal Reserve policy, while weaker inflation may allow the Australian Dollar to extend its recent gains.