Aussie Dollar Fatigue? Technical Signs Hint at an AUD/USD Pullback
By Zain Vawda | 16 February 2026
Market Overview
The AUD/USD currency pair has experienced a significant rally since January 19, gaining approximately 500 pips. This surge is attributed to a weakening US dollar and a growing interest in emerging markets and commodity-linked currencies, particularly the Australian dollar. However, recent price action suggests that the rally may be losing momentum, raising concerns about a potential pullback.
Technical Analysis
Technical indicators reveal signs of fatigue in the AUD/USD pair. The weekly chart shows upper wicks, indicating a possible decline in bullish momentum, while the 14-period Relative Strength Index (RSI) is in overbought territory. The current resistance level appears to be around 0.7150, with two bearish days marking the end of last week.
On a four-hour chart, a critical support level is identified at 0.70690. A breach of this level could lead to further declines, with significant moving averages positioned just below at 0.7054 and 0.7011. A break below the 0.7000 mark could trigger a deeper retracement towards 0.6913 and potentially the 200-day moving average at 0.6861.
Fundamental Outlook
Despite the short-term technical signs suggesting a pullback, the long-term outlook for the Australian dollar remains bullish due to central bank policy divergence. The Reserve Bank of Australia (RBA) has recently raised interest rates and may continue to do so, while the Federal Reserve is anticipated to consider rate cuts later in the year. Market expectations indicate approximately 37 basis points of rate hikes for the RBA through December 2026, contrasting with around 66 basis points of expected cuts for the Federal Reserve.
Market Sentiment
Current sentiment data from OANDA shows that 59% of traders are net-short on AUD/USD. This contrarian view suggests that the high number of short positions could lead to a potential rise in the AUD/USD before any significant selloff occurs.
Upcoming Catalysts
Key events this week include the release of meeting minutes from both the RBA and the Federal Reserve, which are expected to provide further insights into their monetary policy directions. Additionally, high-impact economic data releases from Australia and the US, including employment changes and PCE, GDP, and PMI data, could contribute to increased volatility in the AUD/USD pair.