**AUD/USD Approaches January High Ahead of RBA Rate Decision**
*Original article credit: Matt Weller, Forex.com*
The Australian dollar (AUD) is strengthening against the US dollar (USD) as markets focus on the Reserve Bank of Australia’s (RBA) upcoming rate decision scheduled for February 6, 2025. As AUD/USD flirts with its January highs, forex traders are positioning themselves ahead of what could be a pivotal policy announcement. The RBA’s stance has wide-ranging implications, not just for AUD/USD, but for broader risk sentiment and currency markets in the Asia-Pacific region.
This article elaborates on the AUD/USD’s technical trajectory, the impending RBA policy decision, and what’s driving the broader currency dynamics. Details are supplemented by insights from Matt Weller’s original Forex.com analysis, as well as perspectives from financial news providers such as Reuters, Bloomberg, and local Australian financial press.
## Macro Backdrop: Sustained AUD/USD Strength
The AUD/USD pairing has witnessed a solid upward momentum in early February 2025. Several factors underpin this rally:
– **Solid Domestic Data**: Recent Australian economic prints have shown resilience. Labor market indicators, such as employment growth, retained robustness despite a challenging global outlook. Meanwhile, inflation figures have surprised to the upside, reigniting speculation the RBA may not cut rates as soon as some peers.
– **Shifting Market Expectations**: After months of pricing in earlier and aggressive Fed rate cuts, traders have dialed back expectations following a series of strong US economic data releases. This recalibration has given the greenback some support but, crucially, has not derailed the Aussie’s recovery due to renewed confidence in the Australian economy.
– **Commodities Resurgence**: Australia remains a major exporter of commodities like iron ore, coal, and liquefied natural gas. Improving prospects in China, Australia’s largest trading partner, have buoyed demand for these exports, creating favorable flows for the AUD.
## Technical Picture: AUD/USD Confronts Resistance
Technical analysis, as outlined by Matt Weller, points to several important considerations for traders:
– **January High in Focus**: AUD/USD is approaching the previous high near 0.6870 established in January 2025. This level represents significant psychological and technical resistance.
– **Bullish Chart Patterns**: Recent price action shows a sequence of higher lows and higher highs, reinforcing optimism among bulls. The 50-day and 200-day moving averages are starting to converge, hinting at a possible golden cross, which is typically a bullish signal.
– **Key Support and Resistance Levels**:
– Immediate resistance lies at 0.6870 (January high).
– A sustained break above 0.6870 could expose the next upside target near 0.6925, followed by the psychologically important 0.7000 level.
– On the downside, initial support is seen at 0.
Read more on AUD/USD trading.