AUD/USD Holds Above 0.7100 as Markets Eye Further RBA Tightening

Traders' Opinions

Summary:

AUD/USD holds around 0.7130 as expectations of another RBA rate hike support the Aussie. Further Fed tightening expectations remain the main obstacle to a stronger advance.

BUY AUDUSD

EXP

PENDING

0.71400

Entry Price

0.71850

0.71000

0.71188 +0.00005 +0.01%

Pips

PENDING

0.71000

Exit Price

0.71400

Entry Price

0.71850

The Australian Dollar is trading modestly higher against the US Dollar on Monday, with AUD/USD hovering around 0.7130, as expectations of further monetary tightening from the Reserve Bank of Australia continue to underpin the currency.

The RBA has already delivered 75 basis points of tightening this year, taking the Official Cash Rate to 4.35%. However, persistent inflation concerns have kept another increase firmly on the table ahead of next week's policy meeting.

Governor Michele Bullock reinforced those expectations during her appearance before the Parliamentary Treasury Committee last week. Bullock warned that inflation risks remain skewed to the upside, raising questions over whether the tightening already delivered will be enough to return price growth sustainably toward the central bank's target.

Markets will therefore pay close attention to Bullock's fireside chat in Sydney on Tuesday for any further guidance on the policy outlook. Australian labor market figures on Thursday will provide another important test, with stronger employment conditions potentially adding to expectations for another RBA hike.

The upside for AUD/USD remains constrained, however, by a US Dollar that continues to draw support from expectations of additional Federal Reserve tightening. Minneapolis Fed President Neel Kashkari said over the weekend that inflation remains too high across the US economy and cannot be attributed solely to elevated oil prices, reinforcing expectations that restrictive monetary policy may need to remain in place.

This leaves AUD/USD caught between hawkish expectations on both sides of the pair. The RBA outlook is providing support beneath the Aussie, while the prospect of additional Fed tightening is preventing a more decisive advance.

Attention will also turn toward US-China trade relations, with Presidents Donald Trump and Xi Jinping scheduled to meet in Washington on Thursday to discuss the existing tariff truce. Given Australia's close economic relationship with China, any significant development in the negotiations could provide an additional catalyst for the Australian Dollar.

For now, AUD/USD retains a mildly positive tone around 0.7130, but a stronger advance may require additional hawkish signals from the RBA or an improvement in the broader China-related outlook.

Technical Analysis

AUD/USD is pressing against a significant resistance area on the 1-hour chart, with price trading around 0.7137 after building a steady recovery from the September 17 low. The recent sequence of higher lows suggests buyers are gradually taking control, but the pair now faces an important breakout test.

The immediate barrier sits around 0.7133–0.7138, an area that has repeatedly capped advances since September 14. Price is currently testing the upper boundary of this zone, making the next few candles important for determining whether the recovery can develop into a larger bullish move.

A clean break and sustained hold above 0.7138–0.7140 would strengthen the bullish structure. The chart suggests an initial breakout could be followed by a brief retest of the former resistance zone, allowing buyers to confirm it as new support before attempting another push higher.

If that retest holds, the technical picture opens considerably. The primary upside objective sits around 0.7185–0.7190, where the next major supply zone is located. This region represents the most important visible resistance above current price and would complete the larger recovery projected on the chart.

Support is initially found around 0.7130, while 0.7105–0.7108 remains the more important floor protecting the current higher-low structure. Beneath that, the 0.7080–0.7084 region represents the major demand zone from which the latest recovery originated.

Overall, AUD/USD appears to be transitioning from consolidation into a potential bullish breakout phase. Confirmation above 0.7140, followed by a successful retest, would strengthen the case for continuation toward 0.7185–0.7190.

TRADE RECOMMENDATION

BUY AUD/USD

ENTRY PRICE: 0.7140

STOP LOSS: 0.7100

TAKE PROFIT: 0.7185

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AUD/USD Holds Above 0.7100 as Markets Eye Further RBA Tightening

Technical Analysis

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