AUD/USD traded near 0.7220 in Asian hours on Friday, recovering some of the prior day’s losses. On the daily chart, the pair is moving higher within an ascending channel.
Spot stays above the nine-day and 50-day Exponential Moving Averages (EMAs), which keeps the bias to the upside. The 14-day Relative Strength Index (RSI) is near 61, below overbought levels.
Key Upside Levels
On the upside, the pair may move towards 0.7277, a peak last seen in June 2022 and set on May 6. A break above 0.7277 could open a move towards the channel top near 0.7430.
Support sits at the nine-day EMA at 0.7195, then the channel base near 0.7170. If losses extend, the 50-day EMA at 0.7083 is in view, and a drop below it could shift the bias lower towards 0.6833, the three-month low from March 30.
The technical analysis was produced with the help of an AI tool.
Looking back at the analysis from May of 2025, we saw a clear bullish bias for the AUD/USD, with the pair trading inside an ascending channel around 0.7220. The technical setup then suggested a potential push toward 0.7430, supported by strong momentum indicators. That optimistic scenario did not materialize, as the pair failed to hold those highs and subsequently broke down through the key support levels mentioned.
Strategy For Current Range
Today, the environment is fundamentally different, and we must adjust our strategy accordingly. The Reserve Bank of Australia has held its cash rate steady at 4.35% for several months, citing persistent services inflation which recently printed at 3.6% annually. This hawkish hold provides a floor for the Aussie dollar, preventing a complete collapse.
Simultaneously, the US Federal Reserve’s “higher for longer” stance on interest rates is keeping the US dollar strong, capping any significant rallies in the AUD/USD. As of today, May 8, 2026, the pair is trading near 0.6610, far below the levels we were watching last year. This creates a range-bound environment, which is ideal for options strategies that profit from low volatility.
Given this dynamic, we should consider selling short-dated strangles, perhaps with strikes around 0.6500 and 0.6750, to collect premium as the pair consolidates. For those anticipating a potential break lower on strong US economic data, buying put options below the 0.6580 support offers a defined-risk way to position for a move down. We are no longer looking for the simple upward trend that the 2025 analysis suggested.
