The AUD/USD currency pair has extended its strong rally this week, pushing the Australian dollar to its highest level since June 2022. The pair remains firmly in a bull market, having climbed approximately 21% from its lowest level recorded in 2025. The brokers at EPIQUI explore this topic in depth throughout this article.
This sustained upward momentum reflects growing optimism surrounding the Reserve Bank of Australia (RBA) and a weakening outlook for the US dollar amid signs of slowing economic activity in the United States.
Market participants are increasingly focusing on the upcoming US inflation data, which could significantly influence expectations regarding the Federal Reserve’s future interest rate path. At the same time, traders are positioning for a potentially hawkish stance from the RBA, which is providing strong support for the Australian currency.
The combination of monetary policy divergence, commodity price stability, and technical bullish momentum has positioned the AUD/USD pair as one of the strongest performers among major forex pairs in recent sessions.
Australian Dollar Jumps Ahead of US Inflation Data
The AUD/USD pair has maintained a strong upward trajectory as investors increasingly believe that the Reserve Bank of Australia will sustain a hawkish monetary policy stance throughout the year.
Earlier this year, the RBA implemented an interest rate hike, signaling that the central bank remains committed to controlling persistent inflationary pressures. Analysts now believe that additional rate increases may be implemented, particularly as global energy prices remain elevated and continue to contribute to inflation risks within the Australian economy.
Several RBA officials have recently hinted that further tightening may be necessary if inflation fails to decline at a satisfactory pace. These comments have reinforced expectations that the central bank could raise rates again in its upcoming policy meeting, strengthening the yield advantage of Australian assets and boosting demand for the Australian dollar.
US Inflation Data Becomes the Next Major Catalyst
The next significant catalyst for the AUD/USD exchange rate will arrive on Wednesday, when the United States publishes the latest Consumer Price Index (CPI) report. This release is expected to provide crucial insights into the trajectory of US inflation and the potential policy response from the Federal Reserve.
According to economists, headline CPI inflation likely remained elevated in February, even before geopolitical tensions escalated earlier this month. Forecasts suggest that the headline CPI will come in at approximately 2.4%, while core inflation, which excludes volatile food and energy prices, is expected to remain slightly higher at 2.5%.
These figures would remain above the Federal Reserve’s official 2.0% inflation target, reinforcing the idea that inflationary pressures have not yet been fully contained.
In addition, the unemployment rate increased from 4.3% in January to 4.4% in February, indicating that labor market conditions may be softening. Weak employment data often raises concerns about an economic slowdown, which could complicate the Federal Reserve’s decision-making process.
If inflation remains elevated while the labor market weakens, policymakers may face a difficult balance between controlling inflation and supporting economic growth.
AUD/USD Technical Analysis
From a technical perspective, the AUD/USD pair continues to display strong bullish momentum on the daily chart.
The exchange rate has rebounded significantly over the past several trading sessions, climbing from a recent low of 0.6945 to a multi-year high near 0.7166. This move confirms that buyers remain firmly in control of the market.
One of the most important technical signals supporting the bullish outlook is the pair’s ability to remain above the Supertrend indicator, which often acts as a dynamic support level during strong uptrends.
In addition, the pair is trading above both the 50-day Exponential Moving Average (EMA) and the 100-day Exponential Moving Average, further reinforcing the strength of the prevailing bullish trend. When shorter and medium-term moving averages align below the price, it typically signals sustained upward momentum.
AUD/USD Forecast and Key Levels to Watch
Given the current combination of favorable macroeconomic conditions, RBA rate hike expectations, and strong technical indicators, the AUD/USD pair is likely to continue its upward trajectory in the near term.
Bullish traders are now targeting the next key psychological resistance level at 0.7300, which could serve as the next major milestone if momentum remains intact.
However, traders should also remain cautious of potential downside risks. A break below the important support level at 0.7050 would weaken the bullish structure and could signal the beginning of a short-term corrective pullback.
Overall, the outlook for AUD/USD remains constructive, supported by monetary policy divergence, resilient commodity markets, and positive technical signals. As global investors await the US inflation report, volatility may increase, potentially creating new trading opportunities for forex market participants.
