Buying AUDUSD amid monetary policy divergence and technical rebound

The AUDUSD currency pair is now gaining strength from a shift in investor sentiment following the release of the Reserve Bank of Australia’s (RBA) latest meeting minutes. The report states officials’ intention to raise interest rates in 2026 if inflationary pressures intensify.

Technical indicators on the daily chart confirm bullish momentum. The price has firmly consolidated above the key 20-day simple moving average (SMA 20) at 0.65971, signaling buyer dominance. While quotes are trading in the upper Bollinger Band, with resistance at 0.67050, there is room for further growth.

Oscillators are currently playing in harmony, bolstering the AUDUSD pair’s ascent. The %K and %D Stochastic lines have formed a bullish crossover near overbought territory. This is a clear signal of a short-term upward momentum reversal. The Chaikin Oscillator, positioned to climb higher, is another factor in favor of the pair’s growth. This indicator reflects increased capital inflows and confirms that the current trend is strong enough to persist.

Fundamental factors tell the same story: AUDUSD is set to rise. Australia continues to deal with high inflation expectations. Meanwhile, the chances of more rate cuts by the US Federal Reserve (Fed) in 2026 are increasing. Despite some brief, desperate attempts to bolster the American dollar, the long-term economic outlook for the greenback is challenging due to diverging economic growth among major nations and concerns about the sustainability of the large US budget deficit.

This bullish scenario is highly likely to materialize by the end of the year, considering a mix of technical upward reversal, the increased probability of RBA rate hikes in 2026, and a persistent negative aura around the US dollar. The bulls’ priority in the near future will be to break through resistance at 0.67076, targeting new highs.

Try out the trading strategy presented down below:

Buy AUDUSD at current levels. Place Take profit 1 at 0.67076, Take profit 2 at 0.67585, and Stop loss at 0.65971.

This forecast is valid between December 23 and December 31, 2025.