AUD/USD Price Forecast: Lacks momentum beyond 0.7000 as Middle East tensions underpin USD
- AUD/USD fills the weekly bearish gap opening, though it lacks follow-through strength.
- Middle East tensions and inflation fears underpin the USD, capping gains for the major.
- A break below the 200-SMA on H4 favors bears and backs the case for deeper losses.
The AUD/USD pair attracts some buyers in the vicinity of mid-0.6900s, or a four-day low touched earlier this Monday, and fills the weekly bearish gap heading into the European session. Spot prices, however, struggle to capitalize on the move and currently trade around the 0.7000 psychological mark, down nearly 0.25% for the day.
China's consumer inflation surpassed consensus estimates and rose to a three-year high of 1.3% YoY in February 2026, providing a modest lift to antipodean currencies, including the Australian Dollar (AUD). Moreover, a modest US Dollar (USD) pullback from the highest level since November 2025 turns out to be another factor lending support to the AUD/USD pair.
Meanwhile, an intraday surge of over 25% in Crude Oil prices fueled inflation concerns and dimmed the prospects for near‑term rate reductions by the US Federal Reserve (Fed). This, along with the prevailing risk-off environment and the risk of a further escalation of Middle East tensions, underpin the safe-haven USD and cap the risk-sensitive AUD/USD pair.
From a technical perspective, the near-term bias stays neutral with a slight downside tilt as the AUD/USD pair hovers just below the gently rising 200-period Simple Moving Average (SMA) on the 4-hour chart, showing the broader uptrend is under pressure. The Moving Average Convergence Divergence (MACD) indicator holds almost flat around the zero line after recent minor whipsaws, reinforcing the lack of strong directional momentum.
Moreover, the Relative Strength Index (RSI) around 46 also reflects balanced conditions with a mild bearish lean, consistent with a consolidative phase rather than a decisive trend move. Meanwhile, immediate resistance emerges at 0.7050, where recent swing highs cluster, followed by 0.7080 as the next upside barrier if buyers regain control.
On the downside, initial support stands at the 200-period SMA around 0.7020, with a clear break lower exposing 0.6990 as the next key level. A sustained move below 0.6990 would open the door toward 0.6960, while recovery above 0.7050 would ease downside pressure and focus attention on a retest of the 0.7080 region.
(The technical analysis of this story was written with the help of an AI tool.)
AUD/USD 4-hour chart
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact 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 when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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