AUD\/USD slipped about 0.5% on Thursday, but stayed near multi-year highs after reaching above 0.7140, its highest level since February 2023. The move followed Reserve Bank of Australia messaging that it may raise rates again if inflation stays elevated.<\/p>\n
The RBA lifted the cash rate by 25 basis points to 3.85% earlier this month, and markets price a 74% chance of another rise in May. They also price 38 basis points of further tightening through year-end, while consumer inflation expectations rose to 5% in February, the highest since mid-2025.<\/p>\n
AUD gains were limited by weaker Chinese CPI data and continued producer price deflation, which point to softer demand for Australian exports. In the US, January Non-Farm Payrolls were 130K versus 70K expected, and unemployment fell to 4.3%.<\/p>\n
Attention turns to the delayed US January CPI release, forecast at 0.29% month-on-month for headline CPI and 0.39% for core CPI. Technically, AUD\/USD was near 0.7118 after a 0.7148 high, with support around 0.7100 and 0.6932, and resistance at 0.7148, then 0.7200 and 0.7250.<\/p>\n
Given the Reserve Bank of Australia’s firm stance against inflation, we see the path of least resistance for the AUD\/USD as upward. The policy divergence is clear, as we saw the US Federal Reserve hold rates steady through the latter half of 2025 while the RBA continued its tightening cycle. This fundamental difference supports a bullish outlook for the Aussie in the coming weeks.<\/p>\n
The strong uptrend suggests that buying call options is a straightforward way to trade this view, as it offers defined risk with significant upside potential. We could target strike prices above the key 0.7150 resistance level, such as 0.7200, with expirations in March or April to allow time for the trend to extend. Recent data shows speculative net-long positions have been building for weeks, indicating we would be trading with the prevailing market momentum.<\/p>\n
However, with the daily RSI approaching overbought territory and concerns over Chinese demand weighing on iron ore prices, which have eased to around $135 a tonne, we should prepare for a potential pullback. A good strategy would be to use any dip towards the 0.7100 or 0.7050 support zones as an opportunity to initiate long positions. Selling cash-secured puts or initiating bull put spreads at these lower levels could allow us to collect premium while waiting for a favorable entry.<\/p>\n
The immediate focus must be on today’s US CPI release, which will set the tone for next week. A lower-than-expected inflation figure would likely weaken the US dollar and could be the catalyst that pushes AUD\/USD decisively through the 0.7150 ceiling. Conversely, a hot CPI print could provide the very pullback we are looking for to establish bullish positions at more attractive prices.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" AUD\/USD dips 0.5% but holds near multi-year highs as RBA hawkishness offsets weak China data.<\/p>\n","protected":false},"author":62,"featured_media":16960,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41773","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41773","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=41773"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41773\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16960"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=41773"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=41773"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=41773"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}