AUD/USD reached its highest level since August 2022 on Wednesday. The move followed a delayed US Non-Farm Payrolls report of 130K versus a 70K consensus.
The report also included large downward revisions, with March 2025 payrolls revised 898K lower. Average monthly job gains for 2025 were revised to 15K from 49K.
Rba Policy Shift And Inflation Focus
In Australia, the Reserve Bank of Australia raised the cash rate by 25 basis points to 3.85% on 3 February. This followed a pick-up in inflation in the second half of 2025.
Australian Consumer Inflation Expectations for February are due on Thursday. In the US, January CPI is due on Friday, with headline year-on-year forecast at 2.5% (from 2.7%) and core month-on-month at 0.3%.
AUD/USD traded near 0.7130, up 0.77% on Wednesday, after an intraday high of 0.7143. It is above the 50-day EMA at 0.6810 and the 200-day EMA at 0.6616, with a December low at 0.6466.
The pair has risen over 600 pips from about 0.6700. Stochastic (14, 5, 5) is 86.24/79.19, with resistance at 0.7143 and 0.7200, and support at 0.7000 and 0.6930–0.7000.
Given the sharp move higher in AUD/USD, we are looking at a clear policy divergence between a hawkish RBA and a Federal Reserve facing a weakening US labor market picture. The RBA’s recent rate hike to 3.85% on February 3, its first since we were looking at the end of 2023, confirms their commitment to fighting inflation. This fundamental backdrop supports a continued strong Australian dollar against the US dollar in the coming weeks.
Commodity Tailwinds And Options Strategy Setup
We see strong external factors supporting the Aussie dollar as well. Iron ore futures have recently pushed above $135 per tonne, a 19-month high, driven by renewed demand from China after their Lunar New Year holiday. This rally in Australia’s key export provides a significant tailwind for the currency that we should not ignore.
For traders looking to capitalize on this upward momentum, buying call options on AUD/USD seems like a straightforward strategy. This allows for participation in further gains toward the 0.7200 psychological level while strictly limiting downside risk to the premium paid. Given the strong trend, this offers a direct way to profit if the pair continues its ascent.
However, we must be cautious ahead of Friday’s US CPI data, as a surprisingly high inflation number could quickly reverse the current trend. With the pair’s stochastic oscillator already deep in overbought territory, considering a bull call spread could be a more prudent approach. This strategy would lower the upfront cost and define the risk-reward profile before the volatile data release.
For those expecting a minor pullback before the next leg up, the 0.7000 level is now a critical area of support. Selling put options with a strike price below this level could be an attractive way to generate income. This position would profit if the pair stays above the strike price through expiration, capitalizing on the view that any dip will be shallow.
Looking at the historical context, the last time we saw these exchange rates was in August 2022, when global central banks were in a very different phase of their tightening cycles. The current breakout above 0.7100 is significant as it breaks a multi-year range. If the fundamental drivers persist, we could revisit levels seen during the commodity boom of 2021-2022, where the pair traded comfortably above 0.7400.
