AUD/USD reduced losses from the prior day and traded near 0.7220 in Asian hours on Friday. On the daily chart, the pair is moving higher within an ascending channel.
The price remains above the nine-day and 50-day Exponential Moving Averages. This keeps the near-term direction tilted to the upside after the recent rise.
Momentum And Trend Signals
The 14-day Relative Strength Index is near 61. This points to steady momentum while staying below overbought levels.
Resistance is seen at 0.7277, the highest since June 2022, set on 6 May. If the pair breaks and holds above 0.7277, it could aim for the channel top near 0.7430.
Support starts at the nine-day EMA near 0.7195, then the channel base around 0.7170. Below there, the 50-day EMA stands at 0.7083.
If the pair drops under 0.7083, it may face added selling pressure. That could open a move towards 0.6833, the three-month low posted on 30 March.
What Changed Since Last Year
The technical assessment was produced with the help of an AI tool.
Looking back at the analysis from this time last year, in May 2025, we saw a clear bullish bias for the AUD/USD. The pair was trading strong around 0.7220, holding firmly within an ascending channel and above key moving averages. This technical setup suggested the Aussie dollar had room to run higher, potentially targeting levels not seen since mid-2022.
However, that upward momentum did not last, and the pair failed to sustain a break above the 0.7277 resistance level mentioned back then. We are now trading at a much lower level of around 0.6650, showing a significant trend reversal over the past year. The fundamentals have shifted considerably, making the bullish case from 2025 a distant memory.
On the Australian side, the Reserve Bank of Australia is now signaling a more cautious stance as inflation, while still elevated at 3.8%, is showing signs of cooling amid slowing economic growth. We’ve also seen the unemployment rate tick up to 4.2% last month. Furthermore, prices for iron ore, a key Australian export, have fallen below $110 per tonne on concerns over weaker demand from China.
Meanwhile, the US dollar has remained strong due to the Federal Reserve’s commitment to keeping interest rates higher for longer. With recent US inflation data coming in at a stubborn 3.2% and April’s job report showing a robust 210,000 new jobs, market expectations for a Fed rate cut in 2026 have all but evaporated. This policy divergence between a hawkish Fed and a more neutral RBA is putting sustained downward pressure on the AUD/USD pair.
For derivative traders, this environment suggests that long positions are risky. Buying AUD/USD put options with strike prices around 0.6600 or 0.6550 could be a viable strategy to position for further weakness in the coming weeks. This approach offers a defined risk, limited to the premium paid, while providing exposure to potential downside.
Alternatively, selling out-of-the-money call options or implementing a bear call spread could generate income from the pair’s inability to rally. This strategy would benefit from time decay and declining volatility, provided the AUD/USD remains below the short strike price of the spread. Traders should watch for any surprise shift in central bank language that could alter the current bearish outlook.
