AUD/USD Price Forecast: Posts modest gain to near 0.7100, neutral RSI signals consolidation
- AUD/USD posts modest gains near 0.7090 in Friday’s early European session.
- The pair keeps a neutral with a mild bullish vibe in near term, further consolidation cannot be ruled out with neutral RSI momentum.
- The initial support level is located at 0.7050; the first upside barrier emerges at 0.7125.
The AUD/USD pair trades with mild gains around 0.7090 during the early European session on Friday. The Australian Dollar (AUD) edges higher against the Greenback, following the hawkish stance from the Reserve Bank of Australia (RBA). The RBA raised its Official Cash Rate (OCR) by 25 basis points (bps) to 4.10% at its March meeting on Tuesday. This marks the second consecutive rate hike of the year, following a 25 bps increase in February.
Stronger-than-expected job growth and a steady Unemployment Rate in Australia for February have reinforced the RBA's view that the economy can withstand higher rates. This, in turn, provides some support to the US Dollar (USD) and acts as a tailwind for the pair.
On the other hand, escalating tensions in the US-Israeli war with Iran could drive traders back to safe-haven currencies such as the USD. Israeli Prime Minister Benjamin Netanyahu said on Thursday that Israel "acted alone" in a strike on Iran's South Pars, the world’s largest gas field. Iran has retaliated with missile and drone strikes against Israel and US bases in the region, as well as energy infrastructure in Qatar, Saudi Arabia, and the United Arab Emirates (UAE).
Technical Analysis:
In the daily chart, the near-term bias of AUD/USD is neutral with a mild bullish tilt, as price continues to consolidate just above the upper half of the recent Bollinger Band envelope while holding well above the rising 100-day exponential moving average near 0.6860. The upper band is flattening after a prior expansion, indicating fading upside momentum but not a clear reversal. RSI has eased back toward the mid-50s from overbought territory, signaling that the earlier bullish impulse is losing strength but downside pressure is not yet dominant.
Immediate support emerges around 0.7050, where the lower intraday swing area converges with the mid-portion of the Bollinger structure, followed by stronger support near 0.7000. A break below these levels would expose the 0.6920–0.6900 region, closer to the 100-day EMA, as the next downside objective. On the topside, initial resistance stands at 0.7125, aligned with recent closing highs and just beneath the upper Bollinger Band, with a subsequent barrier near 0.7150. A daily close above 0.7150 would reopen the topside and strengthen the bullish case toward the 0.7200 area.
(The technical analysis of this story was written with the help of an AI tool.)
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
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