Bullish Falling Wedge Formation Offers Strategic Entry Opportunities

Forex

Economic

Summary:

The primary objective for such a move would be the local resistance at 0.7144, which aligns with the upper ceiling of the wedge.

BUY AUDUSD

EXP

PENDING

0.70930

Entry Price

0.71440

0.70600

0.71147 +0.00099 +0.14%

Pips

PENDING

0.70600

Exit Price

0.70930

Entry Price

0.71440

The Australian Dollar (AUD) remains fundamentally well-supported by persistent expectations of a hawkish policy stance from the Reserve Bank of Australia (RBA). This sentiment is driven by domestic inflation, which continues to hover stubbornly above the RBA’s established 2-3% target range. While the Board may elect to implement a tactical pause in March to assess the broader impact of the February rate hike, major financial institutions—including CBA, Westpac, ANZ, and NAB—are largely aligned in forecasting an additional 25-basis point increase during the May meeting. Such a move would elevate the official cash rate to 4.10%, signaling a continued commitment to price stability.

Market participants are now pivoting their attention toward the upcoming TD-MI Inflation Index in Australia, scheduled for release on Monday. Concurrently, traders in the United States are bracing for the release of the ISM Manufacturing PMI, a critical gauge of industrial health.

In the United States, the latest Initial Jobless Claims report indicated that 212,000 individuals filed for benefits for the week concluding February 21. While this figure represents a modest uptick from the previous week’s revised reading of 208,000, it notably arrived below the market’s consensus forecast of 215,000. Furthermore, Continuing Jobless Claims experienced a contraction, descending to 1.833 million from the prior 1.864 million. These figures collectively underscore an underlying resilience within the domestic employment sector, suggesting that the labor market is not yet cooling at a pace that would mandate immediate, aggressive policy intervention.

The minutes from the January Federal Open Market Committee (FOMC) meeting reinforced this patient, data-dependent philosophy. Several committee members articulated that maintaining the current interest rate corridor is the most appropriate course of action for the time being, leaving the door ajar for future adjustments only upon confirmation of a sustainable move toward the 2% inflation target. According to the CME FedWatch Tool, market participants have pivoted their expectations toward a prolonged pause through March and April. Simultaneously, the probability of a 25-basis point rate cut in June has diminished significantly in recent sessions. This hawkish-leaning patience is well-supported by the remarkably resilient labor data, providing the Federal Reserve with the necessary breathing room to remain restrictive without the immediate threat of a labor market collapse.

Geopolitical tensions in the Middle East remain at a fever pitch following declarations from Tehran that it will not permit enriched uranium to be transported out of the country. The substantial U.S. military presence in the region continues to keep market participants on high alert, particularly as President Donald Trump has signaled that military action remains a viable contingency if a diplomatic resolution is not reached. While Iranian Foreign Minister Abbas Araqchi characterized current negotiations as "the most substantive to date," reports from sources familiar with the U.S. position indicate that Washington remains fundamentally dissatisfied with the progress of the talks, adding another layer of risk premium to the global energy complex and broader financial markets. Bullish Falling Wedge Formation Offers Strategic Entry Opportunities_1

Bullish Falling Wedge Formation Offers Strategic Entry Opportunities_1

Technical Analysis

From a technical perspective, AUD/USD is currently navigating a definitive Falling Wedge formation, a pattern often associated with bullish reversals. The structural integrity of this wedge is being reinforced by the 100 and 200-period Moving Averages (MAs), which are trailing the lower boundary of the pattern.

These moving averages are currently situated at 0.7093 and 0.7078, respectively, providing a high-confluence zone of dynamic support. Should the price action revisit this demand floor, we anticipate a renewed bullish rebound. The primary objective for such a move would be the local resistance at 0.7144, which aligns with the upper ceiling of the wedge. A decisive breakout above this level could catalyze a more sustained upward extension.

Our analysis of momentum oscillators currently reflects a period of consolidation. The RSI is oscillating within neutral territory, indicating a temporary lack of directional conviction from either side. Simultaneously, the MACD is fluctuating between marginal bullish and bearish histograms with minimal depth, suggesting that momentum is currently "flat." Given this technical backdrop, a tactical retest of the 0.7093 interest zone appears probable before the bulls attempt to regain dominant control of the pair.

Trading Recommendations

Trading direction: Buy

Entry price: 0.7093

Target price: 0.7144

Stop loss: 0.7060

Validity: Mar 12, 2026 15:00:00

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Bullish Falling Wedge Formation Offers Strategic Entry Opportunities

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