**AUD/USD Targets January High Ahead of Key RBA Rate Decision**
*Based on an article by Matt Weller, updated and expanded with supplementary analysis.*
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The Australian dollar (AUD) is back in the forex market limelight, as traders and investors eye the Reserve Bank of Australia’s (RBA) next move. AUD/USD, one of the most actively traded currency pairs, has been on an upward trajectory. The pair is closing in on its January high, driven by shifting expectations over both RBA monetary policy and the US Federal Reserve’s future actions.
This article examines:
– The latest performance and technical setup of AUD/USD
– Fundamental factors influencing the currency pair
– Market expectations for the upcoming RBA meeting
– The impact of US dollar movements
– Broader macroeconomic factors shaping AUD sentiment
– Key resistance levels and possible trading strategies
**AUD/USD’s Recent Rally and Technical Positioning**
Since the start of 2025, AUD/USD has been gaining strength, reversing course from the weaker levels seen in late 2024. Several factors have contributed to this rally:
– Investors are reassessing the likelihood of RBA rate cuts in the first half of 2025, given recent Australian economic data.
– Diminishing bets on immediate US rate cuts have caused the US dollar to pull back, benefiting higher-yielding currencies such as the Aussie.
On the technical side:
– The January high at 0.6871 is the next crucial resistance level for AUD/USD.
– The currency has formed an upward sloping channel on the daily chart, with higher highs and higher lows supporting the uptrend.
– Momentum indicators such as the Relative Strength Index (RSI) show ongoing bullish momentum but are approaching overbought territory.
– Should the pair break above the 0.6871 resistance, the next target is the psychological 0.7000 mark, with 0.6950 as an intermediate resistance level.
– On the downside, immediate support is found at 0.6765, followed by 0.6700.
**Broader Market Influence: The US Dollar and Risk Sentiment**
The US dollar has come under pressure in early February 2025, receding from highs posted in the fourth quarter of 2024. This has created a more favorable environment for the Aussie, as global investors look for better returns in currencies with higher interest rates and growth prospects outside the US.
Key factors influencing the US dollar include:
– Easing inflation pressures in the US, sparking debate over when the Fed might begin to cut interest rates
– A growing consensus that Fed rate cuts will happen, but will be slower and more spaced out than previously forecast
– A shift in risk sentiment, with equity markets stabilizing and capital flowing back into risk assets and commodity-linked currencies
For AUD/USD, a softer US dollar acts as a tailwind, especially when economic data from Australia suggests stability or resilience.
**Reserve Bank of Australia: Market Ex
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