AUDUSD has great growth potential in the coming weeks and even months. The pair is backed by strong fundamental factors: monetary divergence between national central banks and elevated commodity prices, which give the Aussie a significant advantage.
AUDUSD is now trading at 0.71300, signaling its intention to rally again after a modest pullback. The interest rate gap between the Federal Reserve (Fed) and the Reserve Bank of Australia (RBA) remains the pair’s key growth catalyst. The latter has recently raised its borrowing costs by 25 basis points to 4.35%, marking the third consecutive hike. The reason for such hawkish rhetoric lies on the surface: inflation. The Consumer Price Index (CPI) keeps climbing, fueled by the energy crisis in the Middle East. Meanwhile, the Fed has held interest rates steady at 3.75%, with no intention to change its course in the near future. Expectations of monetary easing in the coming months are barely above zero. The RBA-Fed divergence is currently working in the Aussie’s favor, making it a more attractive option for carry traders and boosting capital inflows.
Soaring prices for raw materials—including natural gas, together with ferrous and non-ferrous metals—provide another solid tailwind for AUDUSD. As a major exporter, Australia gets its fair share of foreign trade revenue, which helps keep the Aussie strong as one of the most robust commodity currencies.
In the medium term, the wide rate gap and skyrocketing prices for raw materials will create a favorable atmosphere for the pair. From a technical perspective, 0.72750 could be the next upside target.
The final recommendation is to buy AUDUSD at the current level, aiming for 0.72750 within a month. To mitigate the risk of adverse market movements, place a Stop Loss order at 0.71000, slightly below support.
This content is for informational purposes only and is not intended to be investing advice.
