Buying AUDUSD as it targets bullish breakout on USD weakness

The Australian dollar is on the front foot right now, firmly climbing within a defined trading range. At the time of writing, the AUDUSD pair is probing the daily high of 0.67399, fueled by a pronounced wave of greenback weakness.

A technical landscape vividly confirms this building bullish momentum. The Stochastic Oscillator has recently completed a meaningful pivot. After drifting in a neutral range with bearish undertones, the %K line has decisively broken above the %D one and is currently climbing toward 50, marking a clear shift in initiative from sellers to buyers.

Further confirming the bullish tilt, not only does the Chaikin Oscillator reside in positive territory, but it is also tracing a persistent upward trajectory. This reflects robust volume underpinning the price advance, promising that the rally is backed by genuine capital inflows and not just a technical bounce.

In the meantime, Bollinger Bands are contracting into a tight squeeze—a classic precursor to a period of low volatility that often births a powerful directional move. With quotes hovering near the upper boundary of the flat channel at 0.67425, a potential bullish breakout is setting the stage to test and overcome key resistance. 

Fundamentally, the winds are shifting in the Aussie's favor. The greenback is facing intensifying headwinds from renewed geopolitical friction spurred by President Trump's tariff threats over Greenland. This has dampened the appetite for dollar-denominated assets. Moreover, diverging regulatory paths open a favorable gap for the pair. Markets are pricing in potential Federal Reserve (Fed) monetary easing in 2026, while the Reserve Bank of Australia (RBA) may maintain or tighten its stance. Such a split paves the way for a supportive yield spread for AUD.

Bringing it all together, the alignment of compelling technical breakout signals with a supportive macro backdrop strongly suggests that upward momentum is likely to prevail in the week ahead.

Consider the following plan for your trading:

Buy AUDUSD in anticipation of a breakout. Try entering the deal at current levels or during a slight correction. Place Take profit at 0.67950. Set Stop loss at 0.66890.

This forecast is relevant between January 20 and January 27, 2026.