AUD/USD. Analysis and Forecast

[Ben Graham]

Today, Friday, the Australian dollar is gaining strength against the U.S. dollar for the second consecutive day, rising above the round 0.6700 level. The pair is climbing amid optimism fueled by speculation that the next move by the Reserve Bank of Australia will be an interest rate hike.

The inflation expectations report for Australian consumers released on Thursday showed a slight easing of price pressures in January to 4.6% from 4.7% in December. However, inflation remains above the Reserve Bank of Australia's (RBA) target range of 2–3% needed to ensure price stability, increasing pressure on the RBA to tighten monetary policy.

In the United States, new indicators reinforced expectations of a pause in Fed rate cuts at least through the end of the first quarter. The Department of Labor reported that initial jobless claims fell to November lows, while regional manufacturing surveys in New York and Philadelphia showed a sharp improvement in business conditions. Although some Federal Reserve officials warn against premature easing amid persistent inflation, the market is pricing in at least one rate cut in 2026. By contrast, the RBA has left interest rates unchanged at its recent meetings, and the market is beginning to factor in the possibility of rate hikes. This divergence is helping to support the Australian dollar.

From a technical perspective, the pair found support at the confluence of two moving averages at the 0.6690 level. After gradually overcoming the round 0.6700 level, it encountered resistance at 0.6710, followed by the next resistance at 0.6727. Failure to hold the moving-average confluence around 0.6690 would accelerate a decline toward the January low near 0.6660.

However, since oscillators remain positive, the path of least resistance for the pair is to the upside.

The material has been provided by InstaForex Company - www.instaforex.com