AUD/USD rose for a second day, reaching about 0.7170 in the Asian session after a modest dip on Monday. The pair stayed within a range that has held for around two weeks.
The US Dollar remained weak as markets waited for this week’s FOMC meeting. A generally positive risk tone reduced demand for the Dollar.
Drivers Behind The Move
AUD/USD found support from the Reserve Bank of Australia’s hawkish stance, despite stalled US-Iran peace talks and tension around the Strait of Hormuz. These factors helped keep the pair bid during the session.
Technically, the recent sideways trading is described as bullish consolidation after a rally from the 100-day simple moving average, touched in March. Momentum indicators stayed positive, with the RSI above 60 and not overbought, and the MACD histogram in positive territory.
A move above 0.7185–0.7190 is needed to break the range and confirm further upside. On pullbacks, support is seen ahead of 0.7100, while a clear move below 0.7100 would point to a correction.
The article notes that the technical analysis was produced with help from an AI tool.
Trade Setups And Positioning
We see the AUD/USD showing positive signs, attracting buyers around the 0.7170 level. This move is supported by a hawkish Reserve Bank of Australia, especially after first-quarter inflation for 2026 came in at a firm 3.6%. This data reinforces the view that the RBA may keep rates higher for longer than other central banks.
A softer US Dollar is helping the Aussie’s advance ahead of this week’s critical FOMC meeting. With core inflation in the US still hovering around 2.8%, traders are hesitant to bet on a decisive policy signal from the Federal Reserve just yet. This uncertainty is weighing on the greenback and benefiting risk-sensitive currencies like the Aussie.
We also see fundamental support from key commodity prices, with iron ore holding steady above $115 per tonne. Furthermore, recent data showed China’s economy grew by a solid 5.3% in the first quarter of 2026, boosting confidence in Australia’s largest trading partner. This positive external environment provides a tailwind for the Australian dollar.
For derivatives traders, this sets up a potential play on a bullish breakout. Buying call options with a strike price just above the 0.7190 resistance could be a way to position for a sustained move higher. We remember from the volatility in 2025 that these ranges can break decisively once a catalyst like an FOMC meeting appears.
On the other hand, dips toward the 0.7100 mark may present opportunities to enter long positions or sell put options. Traders could consider selling cash-secured puts at or below this level to collect premium while defining an entry point. A firm break below that support would suggest this bullish view needs to be reassessed.
