AUD/USD Price Forecast: Rises as bulls eye 0.72 breakout

AUD/USD remains capped by 20-day SMA near 0.7185.
RSI turns neutral-bullish, signaling buyers may regain control.
Break above 0.7200 exposes 0.7277 and 0.7300 resistance levels.

Christian Borjon Valencia FXStreet

AUD/USD advances during the North American session, up by 0.70% as the Greenback edges lower while the US and Iran reach a deal to extend a ceasefire by 60 days, which includes the reopening of the Strait of Hormuz. The pair trades at 0.7167 after bouncing off daily lows near 0.7150.

AUD/USD Price Forecast: Technical outlook

Price action shows the AUD/USD is consolidating within a nearly 100-pip range, capped on the upside by the 20-day Simple Moving Average (SMA) at 0.7185 and on the downside by the 50-day SMA at 0.7098.

Momentum is neutral to bullish, as indicated by the Relative Strength Index (RSI), which could open the door to further upside.

If AUD/USD rises above the 20-day SMA, buyers could challenge the 0.7200 level. A breach of the latter will expose the May 6 daily high at 0.07277, followed by 0.7300.

Downwards, the AUD/USD could turn bearish below the 50-day SMA at 0.7098, clearing the path to reach the latest cycle low of 0.7079, the May 19 low. Below this are the next support levels, the 100-day SMA at 0.7033, followed by the 0.7000 psychological milestone.

AUD/USD Price Chart – Daily

Australian Dollar FAQs

What key factors drive the Australian Dollar?

One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

How do the decisions of the Reserve Bank of Australia impact the Australian Dollar?

The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.

How does the health of the Chinese Economy impact the Australian Dollar?

China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.

How does the price of Iron Ore impact the Australian Dollar?

Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.

How does the Trade Balance impact the Australian Dollar?

The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

GBP/USD gains traction above 1.3400 as markets bet on BoE rate hikes

The GBP/USD pair gathers strength to around 1.3430 during the Asian trading hours on Friday. The British Pound edges higher against the US Dollar on the UK government leadership transition and growing expectations of further Bank of England interest rate hikes.

EUR/USD nudges higher above 1.1400 as traders ramp up their bets on ECB hikes

The EUR/USD pair posts modest gains around 1.1430 during the early Asian session on Friday, bolstered by a softer US Dollar. The European Central Bank is grappling with elevated core inflation, forcing traders to price in more aggressive tightening despite mixed guidance from ECB officials.

Gold hovers below $4,150 amid subdued USD price action

Gold struggles to capitalize on the previous day's positive move, holding below $4,150 in the Asian session on Friday as traders await further developments surrounding the US-Iran saga. Less hawkish FOMC Minutes keep the US Dollar on the defensive and help cap any downside in the non-yielding yellow metal.

Stocks rise as chipmakers rally and Iran oil shock fears fade

Stocks found their footing because two different pressure valves opened at the same time. Oil eased as traders faded the worst-case Iran script, while chipmakers caught a separate gust of oxygen from inside the AI ecosystem itself. That distinction matters. Crude helped calm the macro room, but it was not the spark under semis.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June Federal Open Market Committee meeting landed mid-round-trip, describing a world that had already stopped existing.

Bye, forward guidance: How to trade when central banks choose silence

Central banks have spent years telling markets what might come next. Now, traders face the possibility that they say a lot less. From the Federal Reserve to the European Central Bank and the Bank of England, policymakers are pushing back against forward guidance.