AUD/USD Price Forecast: Upside towards multi-year high of 0.7220 looks possible
- AUD/USD edges lower to near 0.7120 as the US Dollar ticks higher.
- The US Dollar is broadly firm as oil prices remain elevated amid the Hormuz closure.
- Investors await the Aussie Q1 CPI and the Fed’s monetary policy announcement.
The AUD/USD pair trades subduedly around 0.7120 during the European trading session on Friday. The Aussie pair ticks lower as the US Dollar (USD) trades broadly firm amid higher oil prices due to the prolonged closure of the Strait of Hormuz, a critical passage to almost 20% of global energy supply.
As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, holds onto the 10-day high of around 99.00. Meanwhile, the WTI Oil price flattens at around 95.00, but is up almost 20% from its recent low of $78.88 posted on April 17.
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 strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.51% | 0.16% | 0.53% | 0.16% | -0.03% | 0.19% | 0.74% | |
| EUR | -0.51% | -0.34% | 0.00% | -0.30% | -0.51% | -0.36% | 0.24% | |
| GBP | -0.16% | 0.34% | 0.00% | 0.06% | -0.17% | -0.02% | 0.58% | |
| JPY | -0.53% | 0.00% | 0.00% | -0.36% | -0.49% | -0.35% | 0.23% | |
| CAD | -0.16% | 0.30% | -0.06% | 0.36% | -0.10% | -0.01% | 0.56% | |
| AUD | 0.03% | 0.51% | 0.17% | 0.49% | 0.10% | 0.22% | 0.77% | |
| NZD | -0.19% | 0.36% | 0.02% | 0.35% | 0.01% | -0.22% | 0.56% | |
| CHF | -0.74% | -0.24% | -0.58% | -0.23% | -0.56% | -0.77% | -0.56% |
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).
Theoretically, higher oil prices boost United States (US) inflation expectations, a scenario that discourages the Federal Reserve (Fed) from reducing interest rates and improves the US Dollar’s appeal.
Going forward, investors will focus on the Australian Q1 Consumer Price Index (CPI) and the Federal Reserve’s (Fed) monetary policy announcement on Wednesday.
AUD/USD technical analysis
AUD/USD trades close to Thursday's low of 0.7120 as of writing. However, the near-term bias of the pair remains constructive as it holds above the 20-period exponential moving average (EMA), which is at 0.7089. The Relative Strength Index (RSI) around 57 stays in positive but not overbought territory, suggesting buyers retain control while leaving room for further upside extension.
On the downside, initial support is located at the 20-day EMA near 0.7089, where a break would hint at fading bullish pressure and a deeper corrective phase toward the psychological level of 0.7000. Looking up, the pair could revisit the multi-year high of 0.7222; a sustained move above that level would open the door towards 0.7300.
(The technical analysis of this story was written with the help of an AI tool.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
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