Key Points
- AUD/USD climbed above 0.7100 after recovering from a recent four-week low.
- Persistent inflation risks still remain a concern, reinforcing expectations for further policy tightening.
- Markets are pricing in additional RBA rate hikes, with September remaining a key event for traders.
- A softer US dollar and lower Treasury yields also supported the Australian dollar recovery.
- The pair is testing short-term resistance near 0.7115–0.7120 after rebounding from intraday lows.
Market Move
AUD/USD is trading around 0.7112, attempting to extend its rebound after falling to a recent four-week low.
The pair recovered from an intraday dip near 0.7106 before moving higher towards 0.7118, where buying momentum weakened.
The short-term trend remains range-bound, with AUD/USD trading close to its 9-period moving average.
Why Traders Are Watching
The Australian dollar remains supported by expectations that the Reserve Bank of Australia (RBA) could continue tightening monetary policy.
RBA Governor Michele Bullock warned that inflation risks remain elevated, pointing to higher energy costs and domestic capacity pressures, signalling that interest rates may remain higher for longer.
AUD/USD is also benefiting from external factors, including a softer US dollar, easing Treasury yields and improved risk appetite across global markets.
Traders are monitoring whether the RBA’s hawkish stance can provide enough support for AUD/USD to break above recent resistance levels.
Key Trading Levels
| Level | Price Area | Significance |
| Resistance 2 | 0.7118 | Recent intraday high and immediate upside barrier |
| Resistance 1 | 0.7115 | Short-term resistance near current consolidation |
| Pivot | 0.711 | Current trading zone |
| Support 1 | 0.7106 | Intraday low and first downside support |
| Support 2 | 0.71 | Psychological support level |
If the pair maintains support above 0.7100, buyers may attempt another move towards 0.7118, followed by the 0.7130 area. A break above these levels could strengthen the short-term recovery outlook.
On the downside, a failure to hold above 0.7100 could signal that the rebound is losing momentum, bringing 0.7090–0.7080 into focus.
Bullish and Bearish Setups
| Scenario | Conditions | Potential Direction |
| Bullish Setup | AUD/USD holds above 0.7100 and breaks above 0.7118 | Could open room towards 0.7130 and higher resistance zones |
| Bearish Setup | AUD/USD fails to reclaim 0.7115 and breaks below 0.7106 | Could trigger a move towards 0.7100 and recent lows |
A bullish scenario would require buyers to regain control above the 0.7115–0.7118 resistance zone. A successful breakout could signal renewed upside momentum after the recent recovery.
However, if sellers defend resistance and push AUD/USD below 0.7106, the pair may face renewed selling pressure as traders reassess the strength of the rebound.
Disclaimer
The price levels and market scenarios above reflect the author’s assessment at the time of writing. They do not represent financial advice or an official recommendation from VT Markets. Traders should conduct their own analysis and manage risk carefully.
AUD/USD Prediction: What’s Next?
AUD/USD’s near-term direction will depend on the balance between RBA rate expectations, US dollar movements and broader risk sentiment.
As a risk-sensitive currency, the Australian dollar often responds to shifts in equity sentiment and broader market confidence.
Traders will continue monitoring upcoming RBA commentary, inflation developments and economic data for clues for future market direction.
Trade AUD/USD with VT Markets
Trade AUD/USD CFDs with VT Markets and access competitive spreads, flexible leverage options and advanced trading platforms designed for different trading strategies.
Use advanced charting tools to analyse price movements and manage positions with flexible trading conditions.
Start trading forex CFDs with VT Markets.
FAQ
What is driving AUD/USD higher?
AUD/USD is supported by expectations of further RBA rate hikes, alongside a weaker US dollar and improved market risk sentiment.
Why is the RBA considering more rate hikes?
The RBA has highlighted that inflation remains above target, with officials pointing to risks from higher costs and ongoing domestic price pressures.
What are the key AUD/USD levels to watch?
Traders are watching 0.7118 as immediate resistance and 0.7100–0.7106 as key support areas.
Could AUD/USD continue rising?
A sustained move above 0.7118 could support further gains, while a break below 0.7100 may indicate renewed downside pressure.
Start trading now — click here to create your real VT Markets account.
