AUD/USD fell 0.42% on Monday to about 0.6850, marking a fifth straight daily drop. It is down more than 300 pips from its mid-March year-to-date high near 0.7190, after trading roughly 0.6870–0.6830 on Monday. The RBA lifted the cash rate by 25 basis points to 4.10% in March, in a 5–4 vote, for a second consecutive rise. Minutes due Tuesday may indicate whether a third increase in May is being considered, amid comments that a Middle East supply shock could push inflation and expectations higher.

Fed Policy And Key US Data

The Fed held rates at 3.50% to 3.75% in March, and its dot plot still points to one cut this year. US data due include ISM Manufacturing PMI on Wednesday and Friday’s NFP, forecast at 55K after the prior month’s negative result, with Good Friday likely to thin liquidity. On the 5-minute chart, price is near 0.6846 and remains below the 200-period EMA near 0.6857, with resistance at 0.6855–0.6860 then 0.6875. Support sits at 0.6844, 0.6835, then 0.6825. On the daily chart, it trades near 0.6848 below the 50-day EMA, but above the 200-day EMA around 0.67. Resistance is 0.6920/0.6950, then 0.7050 and 0.7120, while support is 0.6800, 0.6750, and around 0.6735. Looking back to this time in 2025, we saw the AUD/USD pair begin a significant slide from its highs near 0.7190. The Reserve Bank of Australia was still hiking rates in a split decision, while the US Federal Reserve held steady, setting the stage for a policy divergence. This difference in direction ultimately pressured the pair lower for the remainder of that year.

Widening Rate Gap And Macro Divergence

Today, that policy gap has widened significantly, with the RBA cash rate at 4.35% while the Fed funds rate is much higher at 5.25% to 5.50%. This substantial interest rate differential continues to favor holding US dollars over Australian dollars, creating a fundamental headwind for the pair. This “carry trade” appeal is a dominant theme for us right now. This is reinforced by the diverging economic data we are seeing now in early 2026. While the US just posted another strong Non-Farm Payrolls number of over 200,000, Australia’s unemployment rate has recently edged up to 4.1%, signaling a softening labor market. The contrast between a resilient US economy and a cooling Australian one supports a weaker Aussie dollar. Furthermore, the outlook for Australia’s largest trading partner, China, remains a key concern for us. Recent manufacturing PMI data from China has hovered just above the 50-point mark, indicating only marginal expansion and a fragile economic recovery. This tepid demand for Australian commodities puts a natural cap on the Aussie dollar’s potential. Given this backdrop, we should view any strength in the AUD/USD as a potential selling opportunity in the coming weeks. A strategy of fading rallies toward key resistance, perhaps around the 0.6650 level, could be effective. Derivative traders might also consider buying put options to speculate on a further breakdown below the recent lows near 0.6500. Create your live VT Markets account and start trading now.

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