AUD Climbs Past US70¢ on Hawkish RBA Signal

Key Moments

RBA Policy Shift Propels AUD Above Key Level

The Australian dollar delivered a notable technical and psychological milestone, recording its first weekly close above US70¢ in more than three years. IG market analyst Tony Sycamore reported that the currency finished the week at US70.13¢, a gain of 0.7 per cent compared with the prior week. This marked the third straight week of advances and the first weekly close above the 0.7000 threshold since January 2023.

The latest advance came despite a turbulent backdrop across global risk assets. Equities, cryptocurrencies and precious metals all suffered heavy midweek selling before staging a recovery into the weekend, yet the Australian dollar maintained its upward trajectory.

Rate Hike and Wider Differentials Support AUD/USD

Sycamore highlighted that the Reserve Bank of Australia played a central role in underpinning AUD/USD. While volatility in the currency market did not match the extremes seen in other asset classes, the policy stance of the central bank provided a clear tailwind.

The Reserve Bank of Australia, serving as the country’s central bank, implemented its first interest rate increase in more than two years and signaled a hawkish outlook. This policy move expanded the interest rate differential in favor of the Australian dollar against the US dollar, adding to its appeal.

Focus Turns to Data, RBA Speeches and US Jobs

Market participants are now shifting their attention to upcoming domestic economic releases and central bank communication in the lead-up to the next RBA board meeting. On the data front, Westpac consumer confidence and NAB business confidence figures are in focus, alongside remarks from senior officials at the Reserve Bank of Australia.

Sycamore indicated that the path forward for the Australian dollar will also be influenced by whether volatility in global markets moderates and by the outcome of the forthcoming US non-farm payrolls report.

Technical Outlook: Support Zone and Upside Targets

From a technical perspective, Sycamore characterizes the latest retreat from the US70.94¢ high as a corrective move rather than the start of a broader downtrend. He notes that support has held in the US68¢ to US69¢ band, reinforcing that zone as a key area for buyers.

With that floor intact, Sycamore believes that “a retest of the US70.94¢ high is now possible.” He further suggests that, if the Reserve Bank of Australia persists with its tightening cycle, the Australian dollar has room to appreciate toward the US71.50¢ to US72¢ region.