AUDUSD is currently trading within the 0.69000–0.71500 range. The pair has recently bounced from the channel’s lower limit, raising the odds of a climb toward the upper end. The technical setup, however, is not the only tailwind for the Australian dollar. Fundamental factors are also leaning in its favor against the greenback.
Let’s take a closer look, starting with the latest rate decisions. On March 17, the Reserve Bank of Australia (RBA) increased borrowing costs by 25 basis points to 4.10%. The move marked the second consecutive rate hike, underscoring the regulator’s hawkish rhetoric aimed at lowering stubborn inflation.
As for the US Federal Reserve (Fed), its initial plan was to continue an easing cycle. However, recent data and shifting market commentary signal that the landscape has changed. The path to monetary loosening is now expected to slow, with the central bank potentially hitting the brakes on further cuts in the near term. This outlook is driven by rising inflation risks stemming from the Middle East crisis and elevated crude prices.
As a result, the policy gap between the RBA and the Fed has widened, making carry trades on the Aussie an attractive option and supporting the AUDUSD’s ascent.
Taken together, fundamental and technical factors point to a high probability of further gains, with the next target resting near a three-year high at 0.71500. The pair looks poised to test this resistance.
The ultimate recommendation is to buy AUDUSD at current prices, targeting 0.71500 within the next one to two months. To mitigate the risk of adverse market movements, place a Stop Loss order just below the 0.69000 support level.
This content is for informational purposes only and is not intended to be investing advice.
