AUD/USD Price Forecast: Holds above 0.7100 on hawkish RBA, bullish technical outlook
- AUD/USD regains positive traction as the RBA’s hawkish stance continues to underpin the Aussie.
- Reduced bets for more aggressive Fed rate cuts support the USD and keep a lid on spot prices.
- The technical setup favors bulls and backs the case for a further near-term appreciating move.
The AUD/USD pair attracts fresh buyers following the previous day's modest pullback and holds steady above the 0.7100 mark through the Asian session on Friday. Spot prices seem poised to register gains for the sixth straight week and remain within striking distance of a three-year peak, touched earlier this month.
The AUD/USD pair holds above the rising 100-period Exponential Moving Average (EMA) on the 4-hour chart, keeping the recent series of higher lows intact on the back of the Reserve Bank of Australia's (RBA) hawkish stance. Adding to this, the Relative Strength Index at 58 stays above its midline, signalling firm but not stretched upside momentum.
The Moving Average Convergence Divergence (MACD) line trades marginally above its signal line in positive territory, and the steady, shallow positive histogram reinforces a controlled bullish tone rather than an impulsive breakout phase. This warrants caution for the AUD/USD bulls as reduced Federal Reserve (Fed) rate cut bets underpin the US Dollar (USD).
Initial resistance emerges near 0.7130, where recent intraday highs cluster, followed by a higher barrier at 0.7160 that would need to yield to extend the advance. On the downside, immediate support is seen at 0.7090, with the 0.7050 region, aligned with the 100-period exponential moving average, acting as a more important floor for the short-term structure.
A clear break below 0.7050 would weaken the upside bias and expose 0.7020 as the next support area, while holding above 0.7090 keeps the focus on a retest of 0.7130 and then 0.7160.
(The technical analysis of this story was written with the help of an AI tool.)
AUD/USD 4-hour chart
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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