AUD\/USD fell about 1.15% on Wednesday, rejecting the 0.7100 area and settling near 0.7025 after briefly trading above 0.7120. The drop reinforced repeated failures to retake the year-to-date high near 0.7190 and erased the prior two sessions\u2019 gains.<\/p>\n
The Federal Reserve held rates, while Jerome Powell said inflation progress has been slower than expected. The 2026 core inflation forecast rose to 2.7% from 2.5%, and US PPI increased 0.7% month-on-month versus 0.3%, with the annual rate at 3.4% versus 2.9%.<\/p>\n
The RBA lifted rates by 25 basis points to 4.10% in a 5\u20134 vote, citing capacity pressures and energy-price effects linked to the Middle East conflict. Australia\u2019s February jobs data is expected at +20.3K with unemployment at 4.1%, alongside the RBA Financial Stability Review.<\/p>\n
AUD\/USD was near 0.7022, with support at 0.7010, then 0.6960 and 0.6900. Resistance sits at 0.7075 and 0.7120, with 0.7150 and 0.7200 above.<\/p>\n
AUD drivers include RBA rates, China\u2019s demand, inflation, growth, trade balance, risk sentiment, and iron ore, valued at about $118 billion a year in 2021. RBA targets inflation of 2\u20133% and can use quantitative easing or tightening.<\/p>\n
Looking back at the analysis from 2025, we can see the market was grappling with a hawkish Federal Reserve and a Reserve Bank of Australia that was still raising rates. The rejection of AUD\/USD from the 0.7100 level at that time was a significant warning. Today, with the pair trading near 0.6550, those concerns from last year have clearly materialized and intensified.<\/p>\n
The Fed’s forecast in 2025 for higher core inflation in 2026 proved accurate, with the latest data from February 2026 showing US core CPI remaining stubborn at 3.8% year-over-year. This has kept the US dollar strong, as rate cuts are pushed further out. Traders should view any strength in AUD\/USD as an opportunity to initiate bearish positions, such as buying put options or establishing bear call spreads.<\/p>\n
In Australia, the situation has shifted since the RBA’s rate hike in early 2025. The February 2026 jobs report showed unemployment ticking up to 4.2%, and recent GDP figures indicate a significant economic slowdown. This policy divergence, with a still-hawkish Fed and a now-dovish-leaning RBA, puts sustained downward pressure on the Australian dollar.<\/p>\n
Furthermore, two key pillars of the Aussie dollar’s strength have weakened considerably since last year. Iron ore prices, a major Australian export, have fallen below $100 per tonne for the first time in months amid concerns over demand. China’s economic recovery remains sluggish, with its latest manufacturing PMI data still showing contraction at 49.1.<\/p>\n
Given this backdrop, we should anticipate that rallies will be limited and sold into. The 0.6900 level, which was viewed as potential support back in 2025, should now be considered a significant long-term resistance area. Strategies that profit from range-bound action or further downside, such as selling out-of-the-money call options, appear prudent in the coming weeks.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" AUD\/USD drops 1.15% to 0.7025 as Fed holds, RBA hikes; key support\/resistance levels ahead.<\/p>\n","protected":false},"author":103,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-51766","post","type-post","status-publish","format-standard","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\/51766","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\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=51766"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/51766\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=51766"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=51766"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=51766"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}