AUD/USD Price Forecast: Seems on track to break above key hurdle of 0.7220
- AUD/USD clings to gains near 0.7200 as the antipodean trades firmly amid hawkish RBA prospects.
- The RBA is expected to raise its OCR by 25 bps to 4.35% in the policy meeting on Tuesday.
- The US Dollar Index is all set for a negative weekly close.
The AUD/USD pair holds onto Thursday’s gains near 0.7200 during the Asian trading session on Friday. The Aussie pair reflects strength as the Australian Dollar (AUD) trades broadly firm amid expectations that the Reserve Bank of Australia (RBA) will raise interest rates again in the upcoming monetary policy on Tuesday.
According to the April 27-30 Reuters poll, 30 of 33 economists have predicted that the RBA will raise its Official Cash Rate (OCR) by 25 basis points (bps) to 4.35%.
Hawkish RBA prospects are backed by rising inflationary pressures in Australia. The data showed on Wednesday that the Q1 Consumer Price Index (CPI) grew at an annualized pace of 4.1%, as expected, higher than the previous reading of 3.6%.
Meanwhile, the US Dollar (USD) is set for a negative weekly close due to Japan’s intervention in the forex market. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades close to its 10-day low of around 98.00.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.26% | -0.64% | -1.48% | -0.71% | -0.83% | -0.46% | -0.64% | |
| EUR | 0.26% | -0.36% | -1.29% | -0.42% | -0.55% | -0.18% | -0.35% | |
| GBP | 0.64% | 0.36% | -0.86% | -0.05% | -0.21% | 0.19% | 0.00% | |
| JPY | 1.48% | 1.29% | 0.86% | 0.82% | 0.69% | 1.12% | 0.92% | |
| CAD | 0.71% | 0.42% | 0.05% | -0.82% | -0.08% | 0.31% | 0.07% | |
| AUD | 0.83% | 0.55% | 0.21% | -0.69% | 0.08% | 0.37% | 0.20% | |
| NZD | 0.46% | 0.18% | -0.19% | -1.12% | -0.31% | -0.37% | -0.18% | |
| CHF | 0.64% | 0.35% | -0.01% | -0.92% | -0.07% | -0.20% | 0.18% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
In Friday’s session, investors will focus on the US ISM Manufacturing Purchasing Managers’ Index (PMI) data for April, which will be published at 14:00 GMT. The Manufacturing PMI is expected to arrive higher at 53.0 from 52.7 in March.
AUD/USD technical analysis
AUD/USD trades at around 0.7200 at the press time. The pair maintains a constructive bullish bias as spot holds above the 20-day exponential moving average (EMA) at 0.7125. The pair has been grinding higher from its late-December lows, and price action above this short-term EMA suggests buyers retain control in the near term.
The Relative Strength Index (14) around 60 reinforces positive momentum without yet signaling overbought conditions, hinting that dips may continue to attract demand while the current structure is preserved.
On the downside, immediate support is defined by the 20-day EMA at 0.7125, where a decisive break would signal waning bullish pressure and expose a deeper correction below the 0.7100 handle. As long as AUD/USD holds over this moving average, focus remains on the topside, with the pair poised to revisit the multi-year high of 0.7220. A decisive break above 0.7220 would push for further upside towards 0.7300.
(The technical analysis of this story was written with the help of an AI tool.)
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
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