AUD/USD continued its bullish trajectory on Thursday, as the Australian dollar strengthened toward a three‑year peak around 0.7150 against the US dollar, driven by hotter‑than‑expected inflation data in Australia and lingering US dollar weakness. On the heels of the latest Australian CPI figures, the currency pair remains in focus for traders positioning ahead of major central bank decisions.
The Australian Bureau of Statistics reported that headline inflation for January rose by 3.8%, slightly above market expectations, while the trimmed mean inflation measure climbed to 3.4%. This persistent inflation backdrop boosts market expectations that the Reserve Bank of Australia (RBA) may maintain a hawkish stance for longer or even deliver additional rate hikes later in 2026.
In contrast, the Federal Reserve has held interest rates steady at 3.50–3.75% but policymakers have signalled openness to easing later this year if inflation softens. The divergence in monetary policy outlooks between the RBA and the Fed is becoming a key driver of flows into AUD/USD, as yield differentials increasingly favour the Australian dollar.
Market participants reported AUD/USD trading near 0.7120 during Asian hours, just a few points below its year‑to‑date high. Positions remain broadly bullish, underpinned by a technical backdrop that shows the pair above key moving averages and supported by macro flows.
At the same time, geopolitical headlines, including recent US tariff developments and labour data, have kept risk sentiment choppy, but overall have not undermined demand for the Aussie against the greenback.
Analysts say the technical setup for AUD/USD remains tilted to the upside near term, with bulls eyeing resistance around 0.7325 if buyers can sustain above pivotal support levels. Upcoming US job claims and consumer confidence data are expected to add volatility to the pair in the next 48 hours.
The White House’s recent trade stance and ongoing labour market strength in Australia further reinforce the narrative that the AUD is outperforming on macro and technical fronts, even as global risk sentiment wavers. This positions AUD/USD as one of the most watched majors ahead of the next policy cues from central banks.
You Might Be Interested In:
USD/EUR Technical Levels Fluctuate as Traders Digest Mixed U.S. Data and Eurozone Stability Signals
