Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6800.
- Add a stop-loss at 0.6650.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6650.
- Add a stop-loss at 0.6800.
The AUD/USD exchange rate continued soaring, reaching its highest point since October last year. It rose to a high of 0.6715, much higher than this month’s low of 0.6440 as commodity prices jump and odds of RBA and Fed divergence rise.
Aussie Boosted by Fed and RBA Divergence Odds
The AUD/USD pair continued its recent bull run as odds that the Reserve Bank of Australia (RBA) and the Federal Reserve will take divergent paths rose.
The Fed has already slashed interest rates three time this year and hinted that it will continue in the coming year. Donald Trump has pledged that he will only nominate a Fed Chair who will cut interest rate.
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As such, there is a likelihood that the bank will deliver more cuts in 2026. However, there is a chance that the other Fed officials will push back against these cuts, especially if inflation remains above the 2% target.
Meanwhile, there are chances that the RBA will hike interest rates or maintain the status quo in the coming meetings. Officials have already hinted that they will not be in a hurry to cut rates, especially if inflation remains at an elevated level.
Recent data showed that Australia’s inflation continued rising, a trend that may continue in the coming months.
The soaring commodity prices are also boosting the AUD/USD pair. Top commodities like copper, gold, and silver have all surged in the past few months. Iron ore is also rising. Historically, the Australian dollar has been seen as a commodity proxy because of the vast amounts that it exports to China.
AUD/USD Technical Analysis
The daily chart shows that the AUD/USD exchange rate has been in a strong uptrend in the past few weeks. It rose and crossed the important resistance level at 0.6685, the previous year-to-date high.
The pair has jumped above all moving averages and the Supertrend indicator. Also, top indicators like the Relative Strength Index and the MACD have continued rising.
Therefore, the pair will likely continue rising as bulls target the next important resistance level at 0.6800. A move below the key support at 0.6600 will invalidate the bullish outlook.
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