The Australian Dollar (AUD) has the potential to rise, but its increase is likely to stay within the range of 0.6810 to 0.6860. In the long run, the AUD may keep climbing, but any further gains could be limited. Important levels to watch are between 0.6860 and 0.6885, according to analysts from UOB Group. In the short term, the AUD was expected to stabilize, but it actually surged to 0.6848 and closed strong at 0.6842, marking a rise of 1.18%. While this jump is significant, more increases are possible, though it may not clearly exceed the 0.6860 mark. Over the next few weeks, the AUD has already broken through a key resistance level at 0.6765 and reached as high as 0.6845, showing that it continues to rise.

Potential Growth And Limitations

There is room for growth, but further gains might be restricted, particularly around the levels of 0.6860 and 0.6885. If the AUD drops below 0.6770, it could signal a decrease in upward momentum. The FXStreet Insights Team, made up of journalists and analysts, provides these insights based on commercial and independent analysis. In January 2025, there was a prediction that the AUD/USD would be capped near 0.6860. However, the pair exceeded this expectation, climbing past 0.7100 by early February 2025 as the US dollar weakened. This highlights that while the direction was accurate, the strength of the rise was underestimated. As of January 23, 2026, the AUD is trading around 0.6745. Recent reports indicate US inflation has cooled to 2.8%, and iron ore prices have risen to $135 per ton. Meanwhile, the Reserve Bank of Australia has taken a neutral approach, keeping interest rates at 3.85% earlier this month.

Strategic Trading Approaches

Given last year’s strong rally, buying March-expiry call options with a strike price near 0.6850 could be a smart move to capitalize on a possible repeat. This strategy allows you to benefit from another potential rally that may exceed expectations. The experience from 2025 suggests not to underestimate the chance of surpassing perceived resistance levels. For traders anticipating a more contained movement this time, employing a bull call spread could be a better approach. This involves buying a 0.6800 call and selling a 0.6950 call to finance the position. This strategy limits risk and sets a clear profit target if the AUD trades within a higher, yet still restricted, range. Currently, implied volatility for AUD/USD options is around 9.1%, nearing a six-month low, making options relatively affordable. This low-cost environment may make strategies like a long strangle appealing, allowing you to profit from significant price movements in either direction without betting on a specific outcome. On the other hand, if we think the upward pressure will lessen, selling cash-secured puts with a strike price near the recent low of 0.6680 might be worth considering. This strategy generates premium income from the options market while expressing the belief that the downside is limited. It correlates with the idea that the AUD will find support, even if a strong rally doesn’t happen. Create your live VT Markets account and start trading now.

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