AUD/USD extends rally as RBA hike boosts Aussie

RBA's hike, softer US Dollar lift the Aussie ahead of Fed's decision

Tuesday's North American session was characterized by an improvement in risk appetite, with Wall Street finishing the day with gains of 0.10% to 0.47% ahead of the Federal Reserve's monetary policy decision. The Greenback registered back-to-back bearish days, losing nearly 1% in the week and 0.29% in the day, according to the US Dollar Index (DXY).

The DXY, which measures the buck's performance against six other currencies, is at 99.57.

Earlier, the RBA hiked rates to 4.10% on a 5-4 narrow vote split, which, according to RBA Governor Michelle Bullock, reflected the timing, not the direction, of monetary policy. Bullock added that "We had a very robust conversation over the past two days about whether we should hold until May," to allow for more data and certainty regarding the Middle East conflict.

US jobs data show the ADP Employment Change 4-week average fell from 14.75K to 9K, while February Pending Home Sales rose 1.8% month-over-month after a 1% drop in January.

Traders' focus is on the Federal Reserve's policy meeting, which started March 17 and ends Wednesday with a policy statement and updated economic projections.

Money markets anticipate the Fed will hold rates steady in March, with only a 25 basis-point cut expected later this year. Investors are also watching Chair Jerome Powell's post-meeting press conference.

AUD/USD Price Forecast: Technical outlook

In the daily chart, AUD/USD trades at 0.7104. The near-term bias is mildly bullish as spot holds well above the clustered 50/100/200-day simple moving averages near 0.69, keeping the broader uptrend intact. The sequence of higher supported closes along the rising trend lines from 0.6673 and 0.6897 confirms that buyers continue to defend shallow pullbacks. RSI around 55 stays above its midline and has recovered from last week’s dip below 50, indicating steady, not exhausted, upside momentum that favours another attempt higher while the uptrend structure remains undamaged.

Initial support aligns with the most recent rising trend-line area around 0.7040, followed by last week’s pullback low near 0.6980, where the lower ascending support from 0.6897 also converges. A break below 0.6980 would expose the 0.6900 region, where the grouped moving averages offer a stronger demand zone. On the upside, immediate resistance stands at Monday’s 0.7150 high, with a daily close above this threshold opening the way toward the 0.7210 region, defined by the upper support trend line’s projected extension turning into a potential supply band.

(The technical analysis of this story was written with the help of an AI tool.)

Australian Dollar FAQs

What key factors drive the Australian Dollar?

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.

How do the decisions of the Reserve Bank of Australia impact the Australian Dollar?

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.

How does the health of the Chinese Economy impact the Australian Dollar?

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.

How does the price of Iron Ore impact the Australian Dollar?

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.

How does the Trade Balance impact the Australian Dollar?

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.

FXStreet

100만 명이 넘는 사용자가 FXStreet를 통해 실시간 시장 데이터, 차트 도구, 전문가 인사이트, 포렉스 뉴스를 이용합니다. 포괄적인 경제 캘린더와 교육 웨비나는 트레이더가 정보를 유지하고 신중한 결정을 내리도록 돕습니다. FXStreet는 바르셀로나 본사와 전 세계 지역에 걸쳐 약 60명의 팀으로 구성되어 있습니다.

Item 1 of 0