The AUD/USD exchange rate extends its winning streak, advancing approximately 0.26% to 0.7015 during early European trading. The latest price action suggests a potential bullish reversal, supported by persistent Australian inflation pressures, expectations of restrictive Reserve Bank of Australia (RBA) monetary policy, and a softer US Dollar.
The pair is approaching a critical technical resistance zone, where a confirmed breakout could strengthen the near-term upside bias. Aurelgate’s experts offer informed insights and a thorough exploration of the subject.
The Federal Reserve’s expected decision to keep interest rates at 3.75%–4.00% adds another factor for AUD/USD traders. With policymakers entering a communications blackout ahead of the decision, market participants are increasingly focused on economic indicators and interest rate expectations.
A relatively hawkish RBA outlook against a Fed holding pattern could support further appreciation in the currency pair.
AUD/USD Technical Analysis: EMA Signals Improving Price Structure
On the daily timeframe, AUD/USD trades around 0.7014, remaining above its 20-period exponential moving average (EMA) at 0.6995. The pair’s position above this dynamic indicator suggests a constructive short-term price structure, with the EMA potentially providing initial trend support.
The distance between the current price and the EMA is approximately 19 pips, equivalent to around 0.27% of the exchange rate. This relatively narrow separation suggests that the bullish structure remains vulnerable to short-term volatility.
Sustained daily closes above 0.6995 would reinforce the immediate recovery, while a decisive close below the EMA would indicate weakening upside momentum.
The chart also identifies two rising trend-line supports near 0.6904 and 0.6903. These levels form a broader ascending support zone approximately 110–111 pips below the current price. Their upward slope suggests that buyers have been defending progressively higher price levels, a characteristic frequently associated with an improving market structure.
The Relative Strength Index (RSI), calculated over 14 periods, stands at 50.96. This reading is only 0.96 points above the neutral 50 threshold, indicating that bullish momentum is present but not yet particularly strong. The indicator remains well below the conventional overbought threshold of 70, leaving room for additional upside if buying pressure increases.
A sustained RSI advance above 55 would provide stronger evidence of improving bullish momentum, while a move toward 60 could confirm a more decisive acceleration. A decline below 50 would weaken the momentum profile and raise the probability of consolidation.
Resistance at 0.7020 Determines the Next Direction
The immediate technical barrier is the descending trend line near 0.7020, located approximately 6 pips above the current price of 0.7014. This proximity makes the level particularly important for short-term price discovery.
A brief intraday penetration would provide limited confirmation; a sustained daily close above 0.7020 would offer a more convincing bullish breakout signal.
If buyers clear this resistance, the pair could enter a stronger recovery phase as bearish positioning unwinds and breakout-driven demand increases. The next significant technical reference is the higher descending trend line originating around 0.7138, approximately 124 pips above 0.7014, representing potential upside of roughly 1.77%.
The 0.7138 region is a conditional resistance objective rather than a guaranteed price target. Reaching it would require sustained buying pressure, improving momentum, and continued fundamental support for the Australian Dollar.
Support Levels and Bearish Invalidation
The first downside reference is 0.6995, where the 20-period EMA currently sits. A successful retest followed by a rebound would indicate that former resistance or short-term selling pressure is giving way to renewed demand. This level is therefore important for maintaining the immediate bullish bias.
A daily close below 0.6995 would weaken the recovery structure and expose the lower ascending support zone at 0.6904–0.6903. From 0.6995, this represents a potential decline of approximately 91–92 pips. A breakdown through this broader support area would undermine the higher-low structure and increase the risk of a deeper bearish correction.
Price confirmation remains essential: support holds, resistance breaks, and momentum expands are stronger signals than isolated intraday movements.
AUD/USD Price Forecast and Conclusion
The AUD/USD outlook is cautiously bullish, with price holding above the 0.6995 EMA, rising trend-line support near 0.6904–0.6903, and an RSI of 50.96 indicating modest positive momentum.
The immediate trigger is a sustained breakout above 0.7020; confirmation could open the way toward 0.7138, representing approximately 124 pips of potential upside from current levels. A failure to break resistance, followed by a move below 0.6995, would weaken the bullish setup and shift attention toward the lower support zone.
Fundamentally, persistent Australian inflation and expectations of unchanged US interest rates provide a supportive backdrop, although the strength of the reversal will depend on subsequent economic data and price confirmation. The bullish scenario remains valid while support holds, with 0.7020 serving as the key breakout threshold.