AUD/USD drops toward 0.6300 after a bearish opening gap on Middle East conflict

• AUD/USD opens the week on the wrong footing, eyes 0.6300 once again.
• US Dollar jumps on safe-haven demand as Middle East military conflict rattles market.
• All eyes now remain on geopolitical tensions and US CPI data this week.

AUD/USD is falling hard toward 0.6300 in early Asian trading on Monday, having faced rejection at 0.6400 in the aftermath of the US Nonfarm Payrolls data on Friday.

The pair opened Monday’s trading, with a 57-pip bearish gap, licking its wounds in a reversal from multi-day highs.

The renewed weakness in the AUD/USD pair could be attributed to a fresh wave of risk aversion at the start of the week in Asia, as the weekend’s military conflict in the Middle East between the Hamas movement in Palestine and Israel rattles risk sentiment.

Investors scurry to the safe-haven US Dollar, fearing escalating geopolitical risks in the Middle East, which has sent Oil price through the roof. Markets remain worried over the potential impact of the renewed Oil price surge on global inflation and growth outlook, especially at a time when central banks are still reeling from the pain induced by Russia’s invasion of Ukraine, back in early 2022.

Fresh developments around the Middle East conflict will be closely followed for further impact on the safe-haven US Dollar and, in turn, on riskier assets such as equities, Australian Dollar, etc. Investors also remain cautious heading into the all-important US Consumer Price Index (CPI) week.

At the time of writing, the US S&P 500 futures, a risk barometer, are falling 0.80% on the day while the US Dollar Index is up 0.25% on the day, leaving AUD/USD down nearly 0.30% to trade near 0.6360.

AUD/USD: Technical levels to consider