AUD/USD Pair Performance
The AUD/USD pair closed at 0.6916, with predictions for consolidation between 0.6880 and 0.6940. The potential for further growth is present, but the pair must surpass 0.6945 to target 0.6985.
In the recent 24-hour review, AUD reached a high of 0.6941 before settling at 0.6916, marking a 0.27% rise. However, upward momentum is declining, indicating a likely consolidation between 0.6880 and 0.6940.
Over the coming 1-3 weeks, expectations for a stronger AUD remain. To anticipate movement towards 0.6985, maintaining a position above 0.6945 is necessary. The strong support level stands firm at 0.6840, as long as it isn’t breached.
Given the AUD/USD is likely to consolidate between 0.6880 and 0.6940, this presents a near-term opportunity for range-trading strategies. Option traders could consider selling strangles with strikes outside this band to collect premium from the expected lack of movement. We see this as a temporary pause after the recent rally.
Fundamental and Market Influences
We believe the fundamental picture supports a stronger Australian dollar in the coming weeks. Australia’s Q4 2025 inflation data released last week came in hotter than expected at 3.8%, putting pressure on the RBA to maintain its hawkish stance. This contrasts sharply with slowing December 2025 retail sales figures from the United States, which reinforces the market’s view that the Federal Reserve will remain on hold.
This economic divergence is being supported by strong commodity prices, with iron ore holding firm above $130 per tonne on solid demand signals. We remember how the pair struggled for traction below the 0.6700 mark for much of the third quarter of 2025. The current strength represents a significant shift from that period.
A decisive break and hold above 0.6945 should be seen as a trigger for more aggressive bullish positions. Traders could use this signal to buy call options or initiate bull call spreads targeting the 0.6985 level. Our bullish outlook remains valid as long as the strong support at 0.6840 is not breached, which can serve as a key level for stop-losses or for purchasing protective put options.
