AUD/USD Sets Sights on Yearly Highs as Market Sentiment Improves

Dollar and Oil Prices: The dollar is declining as it remains closely linked to fluctuating oil prices, which have dropped from a high of $119.50 to $87.10 amid changing sentiments regarding the US-Iran conflict.

Market Sentiment and Stocks: Traders are optimistic about a potential market rebound, with S&P 500 futures up 0.3% and the Australian dollar (AUD) gaining 0.4% against the US dollar, indicating a shift in market mood.

Central Bank Considerations: The Reserve Bank of Australia (RBA) may consider rate hikes due to inflation concerns exacerbated by rising oil prices, with traders pricing in a 35% chance of a rate hike next week.

Future Outlook for the Aussie: As market focus shifts away from geopolitical tensions, the Australian dollar is positioned to benefit from potential policy divergence, with key resistance levels around 0.7135-50 being closely monitored.