The Australian Dollar (AUD) has room to rise, but this increase is probably part of a higher range between 0.6810 and 0.6860. In the long-term, the AUD might continue to rise, although further gains could be limited. Key levels to monitor are between 0.6860 and 0.6885, according to UOB Group’s FX analysts.
In a 24-hour view, expectations for the AUD to consolidate were incorrect as it surged to 0.6848, closing strong at 0.6842, an increase of 1.18%. Despite the rise seeming large, there is potential for further increases, though it probably won’t break clearly above 0.6860. In the one to three weeks view, the AUD already surpassed significant resistance at 0.6765 and reached a high of 0.6845, indicating no current pause in its advance.
Potential Growth And Limitations
Despite potential for more growth, the extent of further gains may be capped, with levels of 0.6860 and 0.6885 being critical. If the AUD falls below 0.6770, it could mean a reduction in the current upward pressure. The FXStreet Insights Team, consisting of journalists, provides these observations relying on insights from both commercial and independent analysts.
Looking back at a similar analysis from January 2025, we saw a forecast that AUD/USD would be capped around the 0.6860 level. In reality, the pair overshot this significantly, rallying past 0.7100 by early February 2025 as the US dollar weakened. This shows that while the direction was right, the upward momentum was greatly underestimated.
Today, on January 23, 2026, the situation feels familiar, with the Aussie dollar currently trading around 0.6745. Recent data showed US inflation cooling more than expected to 2.8%, and iron ore prices have firmed up to $135 per tonne. The Reserve Bank of Australia, however, has maintained a neutral stance, holding rates at 3.85% earlier this month.
Strategic Trading Approaches
Given last year’s powerful rally, buying March-expiry call options with a strike price near 0.6850 could be a good way to position for a potential repeat. This strategy allows for participation in a rally that might once again prove stronger than anticipated. The lesson from 2025 is to not underestimate the potential for a breakout above perceived resistance levels.
For traders who expect a more contained move this time, a bull call spread could be more appropriate. One might consider buying a 0.6800 call while simultaneously selling a 0.6950 call to finance the position. This defines the risk and provides a clear profit target if the pair trades within a higher, but still limited, range.
Implied volatility in AUD/USD options is currently sitting near a six-month low of around 9.1%, making option premiums relatively inexpensive. This low-cost environment could also make strategies like a long strangle attractive, which would profit from a significant price move in either direction. It’s a way to trade the expectation of a breakout without betting on the specific direction.
Conversely, if we believe the upward pressure will ease, selling cash-secured puts with a strike price near the recent low of 0.6680 could be considered. This strategy collects premium from the options market while expressing the view that downside is limited. It aligns with the idea that the pair will find support, even if a strong rally does not materialize.
