AUD/USD pulled back after a spike to 0.7197. Intraday trading is expected to stay within 0.7130 to 0.7180.
Over the next 1 to 3 weeks, upside risk remains, but conditions are overbought and momentum has slowed. A daily close above 0.7190 is needed to allow a move towards 0.7220.
Further declines may occur, but there is no clear rise in downward momentum. Any downturn is expected to be part of the current range.
Support at 0.7085 remains in place for the bullish case. If 0.7085 is broken, the upside view would weaken.
The piece was produced using an AI tool and checked by an editor.
We see the Aussie dollar’s recent pullback from the 0.6800 level as a consolidation phase within a broader uptrend. This view is supported by the Reserve Bank of Australia’s hawkish stance, as their latest minutes highlighted concerns with inflation still running at 3.1%. In the immediate term, we expect the pair to trade within a 0.6710/0.6770 range.
The underlying bullish pressure is being fueled by strong commodity prices, with iron ore recently pushing above $125 per tonne. This environment suggests that buying out-of-the-money call options or implementing bull call spreads could be a viable strategy to capture potential upside. These structures would allow traders to profit if the Aussie continues its climb while limiting downside risk.
This situation is similar to the overbought conditions we observed in early 2025, where a brief pullback preceded the next leg higher. For the current bullish case to remain intact, the pair must hold above the strong support level of 0.6650. A decisive daily close above the key resistance at 0.6820 would confirm the trend’s resumption, opening the way for a move toward the 0.6900 mark.
Further support for our view comes from the US, where recent CPI data came in below expectations at 2.9%. This has softened the US dollar, as markets are now pricing in a more cautious Federal Reserve. This dynamic makes the Aussie dollar comparatively more attractive and supports the case for continued strength.
