Australian Dollar Forecast: AUD/USD Tests 0.7000 as “War Premium” and NFP Loom Large

Published: March 06, 2026

Key Points

• The Australian Dollar (AUD) is currently trading around 0.7036, recovering from a low of 0.6974.
• Despite a strong US Dollar due to geopolitical tensions, the AUD is supported by a robust 2.6% annual GDP growth and high commodity prices.
• RBA Governor Michele Bullock hints at a potential rate hike to 4.10% by May, indicating a divergence from the Federal Reserve's policies.
• Critical price levels for AUD/USD are identified, with a break above 0.7060 signaling a bullish reversal.

Current Economic Context

The Australian economy has shown unexpected resilience, with GDP growth of 0.8% in Q4 2025, surpassing forecasts. This growth is attributed to increased inventories and government spending, making it challenging for the Reserve Bank of Australia (RBA) to determine its monetary policy direction.

Geopolitical Influences

The ongoing US-Israel-Iran conflict, termed "Operation Epic Fury," is exerting pressure on the AUD. The U.S. Dollar Index has strengthened due to safe-haven demand, particularly following military actions in the region. The closure of the Strait of Hormuz has also led to a significant rise in oil prices, further impacting the AUD negatively.

Technical Analysis

The AUD/USD pair is currently at a critical juncture, facing resistance around 0.7035-0.7060. The 200 EMA is positioned near 0.7040, adding to the resistance. A sustained break above 0.7060 could lead to targets of 0.7090 and 0.7136, while a failure to break this level may push the pair back towards support levels at 0.7006 and 0.6973.

Analyst Recommendations

Traders are advised to remain cautious ahead of the upcoming US Non-Farm Payroll (NFP) report. A strong jobs report could bolster the USD, potentially driving AUD/USD down to 0.6900. Conversely, a confirmed break above 0.7060 could signal a buying opportunity, targeting 0.7090.

Conclusion

The Australian Dollar is navigating a complex landscape of domestic economic strength and external geopolitical pressures. Traders should monitor key resistance and support levels closely as market dynamics evolve.