AUD/USD rose for a second day, up 0.36%, as the US dollar slipped while US growth slowed and inflation moved towards 3%. It was at 0.7086, set for a weekly gain of more than 0.19%.
The pair stayed upward after breaking above the 20-day simple moving average at 0.7034. It then moved past 0.7050 and approached 0.7100.
Momentum And Key Resistance Levels
Momentum stayed positive, with the RSI rising after a low near 59.34. If the RSI moves above 65.00, price may test resistance and the year-to-date high at 0.7147.
If AUD/USD drops below 0.7000, support sits at the 6 February low of 0.6897. Further support is the 50-day SMA at 0.6832.
Around this time last year, in February 2025, we saw a clear bullish bias for the AUD/USD as it pushed past 0.7080. The optimism was fueled by a weakening greenback, with traders targeting the yearly high of 0.7147. However, we recall that this momentum faded, and the pair failed to hold those gains, eventually reversing course later that month.
The landscape today, in February 2026, is fundamentally different. The AUD/USD is trading near 0.6650, as the US inflation narrative has shifted from a persistent threat to a managed concern, with the latest CPI data showing a core rate of just 2.5%. This contrasts sharply with early 2025 when US inflation was a much bigger issue, helping to drive temporary weakness in the dollar.
Last year, the market was reacting to signs of slowing US economic growth while inflation remained hot. Today, US GDP growth has stabilized at a more moderate 1.5% annual pace, and the Federal Reserve’s policy path appears much clearer. This has reduced the broad market uncertainty that we saw in early 2025, leading to lower overall currency volatility.
Derivative Strategies In A Range Bound Market
For derivative traders, this lower implied volatility environment suggests strategies like selling options may be more favorable than they were a year ago. With less expectation of a dramatic breakout, collecting premium by writing covered calls against existing long positions or selling cash-secured puts at key support levels could be a prudent approach. We believe the reduced fear in the market makes being a net seller of volatility more attractive.
Given the current stability, we see opportunities in range-bound strategies rather than the directional bets that were popular in early 2025. Using options to define a likely trading channel, perhaps through structures like short iron condors, could capitalize on the pair’s tendency to oscillate between established support and resistance. We are looking at a potential range between 0.6500 and 0.6800 over the coming weeks.
