The main event for AUDUSD last week was the Reserve Bank of Australia's (RBA) latest move: another rate increase, this time to 4.35%. This is the third hike in a row in 2026, and the culprit is plain to see—inflation remains near 4.6%, refusing to go back down. The regulator is walking a fine line, striking a cautious yet unmistakably hawkish tone. In every policy statement, the message is clear: price pressures must be crushed, even if economic growth starts to wobble.
For carry traders, this hike is like rocket fuel. The Australian dollar just became more attractive to those chasing yields. And the timing couldn't be better. The US Federal Reserve (Fed) is still parked at 3.75%, with no plans to raise borrowing costs this year. Chairman Jerome Powell keeps talking up the American GDP's resilience, but for now, the monetary pedal isn't moving. Such a divergence gives the Aussie—and other commodity currencies—an advantage against the dollar.
Of course, global risks continue to flare up. Tensions in the Middle East, for example, would typically prompt investors to flock to the safe-haven greenback. However, the Aussie is showing real grit. Not only has it shrugged off the noise, it has also punched through this year's local highs and is now comfortably sitting at four‑year peaks.
The final recommendation:
— Buy the AUDUSD pair at the current price, targeting 0.74250 within one to two months.
— To shield ourselves from adverse market movements, place a Stop Loss order just beneath the support level, namely at 0.71500.
This content is for informational purposes only and is not intended to be investing advice.
