AUD/USD: The Technical Squeeze Between 0.6980 and 0.7070

Author: Zain Vawda
Date: 25 March 2026

Overview

The AUD/USD currency pair is currently experiencing a technical squeeze, trading within a narrow range between 0.6980 and 0.7070. This situation is influenced by recent economic data and geopolitical developments, particularly the strength of the US Dollar.

Recent Economic Data

Australia's annual Consumer Price Index (CPI) showed a slight cooling to 3.7% in February 2026, which is still above the Reserve Bank of Australia's (RBA) target range of 2-3%. This figure was lower than the market expectation of 3.8% and previous months' data.

• Goods inflation eased to 3.5%, driven by a significant drop in transport costs, particularly automotive fuel, which fell by 7.2%.
• Other categories that contributed to the downward trend include:
  • Alcohol and tobacco: 4.3%
  • Education: 4.8%
  • Clothing: 4.9%
  • Communication: 0.8%
• However, inflation for food and non-alcoholic beverages remained steady at 3.1%, and housing costs increased to 7.3%.

Market Sentiment and Future Outlook

The RBA has raised interest rates to 4.10% to combat inflation, and there are expectations for further rate hikes. The market remains cautious, particularly with the geopolitical tensions stemming from the US-Iran conflict, which has influenced the strength of the US Dollar.

In the absence of significant Australian economic data, the direction of AUD/USD will largely depend on US Dollar movements and geopolitical developments. If diplomatic efforts between the US and Iran progress, the US Dollar may weaken, potentially allowing AUD/USD to rise above the 0.7000 level.

Technical Analysis

The AUD/USD pair is currently forming a descending triangle pattern. Key technical levels include:

• Resistance: A cluster of moving averages (50-period, 100-period, and 200-period SMAs) between 0.7040 and 0.7070.
• Support: The psychological level at 0.7000, with a critical support level at 0.6980.

The Relative Strength Index (RSI) is neutral at approximately 45.50, indicating potential for movement in either direction.

Conclusion

The AUD/USD pair is tightly coiled within the 0.6980 to 0.7070 range. Traders should anticipate sideways movement until a breakout occurs, either above 0.7070 or below 0.6980, which will dictate the next significant price movement.

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