Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.7100.
- Add a stop-loss at 0.6900.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6900.
- Add a stop-loss at 0.7100.
The AUD/USD exchange rate continued its strong upward trend, reaching its highest level since November January 2023, after the Federal Reserve interest rate decision and the strong Australian inflation data. It rose to a high of 0.7017, much higher than last year's low of 0.5915.
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Australian Dollar Surge Gains Steam
The AUD/USD exchange rate gained steam after Australia published a strong consumer inflation report. Data compiled by the Australian Bureau of Statistics (ABS) showed that the headline Consumer Price Index (CPI) moved further away from the Reserve Bank of Australia (RBA) target of 2.0%.
The report showed that the headline CPI rose to 3.8% in December from the previous 3.4%. Also, the trimmed mean CPI rose from 3.2% to 3.3% while the weighted mean CPI rose to 3.6%. These numbers mean that inflation is moving in the wrong direction.
The report came after the country published strong jobs numbers, with the economy adding over 55k jobs. Therefore, the most likely scenario is where the RBA hikes interest rates in the next meeting.
Meanwhile, the Federal Reserve delivered an expected interest rate decision. The bank decided to leave interest rates unchanged as most analysts were expecting. Two officials, Christopher Waller and Stephen Miran, voted to cut interest rates by 0.25% in this meeting.
The bank upgraded its view on the economy, noting that it was expanding at a solid pace and that inflation remained elevated.
Looking ahead, the next key catalyst for the AUD/USD pair will be the upcoming US trade numbers. The numbers are expected to show that the country’s exports dropped by $1 billion to $302 billion, while its imports dropped to $331 billion.
AUD/USD Technical Analysis
The weekly timeframe chart shows that the AUD/USD exchange rate continued its strong uptrend this week, moving from a low of 0.5915 in 2025 to the current 0.7020, the highest level in years.
It has moved above the key resistance level at 0.6937, its highest level in September 2024. The pair has moved above much higher than the 50-week and 200-week Exponential Moving Averages (EMA).
Additionally, the Relative Strength Index (RSI) and the MACD indicators have continued rising. Therefore, the most likely situation is where it continues rising as bulls target the next key resistance level at 0.7100.