The AUDUSD pair is under selling pressure once again, yet it has managed to stay above the 0.7200 threshold. The Aussie continues to climb with surprisingly little resistance, inching ever closer to multi-year highs. For now, the bullish script remains intact, propped up by stubborn domestic inflation and a Reserve Bank of Australia (RBA) that refuses to rush.
What is behind the latest pullback? A fresh wave of dollar buying. Investors are still digesting April's hotter‑than‑expected Consumer Price Index (CPI), while hopes for a US‑Iran peace deal to end the Middle East crisis keep simmering.
Zoom out, and Australia's economy looks healthy, stable, and frankly speaking, in far better shape than most of its G10 peers. Solid domestic demand and decent growth figures are doing the heavy lifting. Meanwhile, persistent inflation justifies the RBA's cautious, data-dependent posture, especially after its latest meeting where it hiked interest rates to 4.35%, more or less in line with market forecasts. Confirming the upbeat narrative, preliminary PMI data showed manufacturing at 51.0 and services at 50.3—both climbing back into expansion territory in April.
That said, not every number sparkles. The latest trade balance surprised to the downside, swinging to an unexpected deficit of A$1.841 billion in March—a sharp drop from February's A$5.026 billion surplus. On the brighter side, GDP growth came in at 0.8% quarter‑on‑quarter and 2.6% year‑on‑year at the close of 2025.
Now, back to the elephant in the room: inflation. The latest CPI reading was 4.1% on an annual basis, with the trimmed mean and weighted median sitting at 3.5%. So far, there are few genuine signs of disinflation to fuel optimism. For the RBA, this means the mission is far from being accomplished. Policymakers continue to signal that price growth may only return to target around mid‑2028, all while hammering home a message of patience, not an imminent policy shift.
All in all, the backdrop for the Australian dollar remains supportive, and the central bank's steady hand should provide a cushion during any pullbacks.
The ultimate recommendation is to buy AUDUSD. Lock in profits at 0.7280. Place Stop Loss at 0.7205.
Calculate your open position so that a potential loss (protected by a Stop Loss order) is limited to 1% of your deposit. If your account balance does not allow entering a position of this size, it is better to skip the trade and wait for other market signals that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
