The Australian dollar has fallen in the early hours of Friday, and continues to see a lot of pressure in general.
AUD/USD
The Australian dollar continues to struggle on Friday as risk appetite is really starting to cause issues. Keep in mind that this is a pair that is at a critical inflection point after a strong rally in the early part of 2026. The Australian dollar is currently undergoing a sharp correction as it tests major support underneath and significant resistance above.
The Reserve Bank of Australia had been hawkish and recently had raised rates. The market is expecting the Reserve Bank of Australia to hike rates by 25 basis points on March 17 to an interest rate of 4.10%. This is providing a little bit of a floor in the Australian dollar at the moment, but the statement will be watched closely.
US Dollar Strength and Fed Expectations
The surging US dollar has offset this quite a bit and it does make a certain amount of sense that we have fallen as the safe-haven bid for the US dollar has been very strong. The US dollar breaking above 100 in the US dollar index due to the escalating conflicts in the Middle East is starting to reprice Fed rate cuts into the situation as inflation, not only due to wartime footing but the labor market resiliency in America, has people thinking that the Fed itself may not be a huge rate cutter in the short term.
Higher oil prices typically will hurt the Australian dollar due to global growth fears, but its position as an energy exporter is keeping hedge funds bullish on the Australian dollar in the options market. With all of that being said, this is a market that I think continues to see more of a “buy on the dip” mentality.