Australian Dollar Forecast: AUD/USD Bulls Eye 0.7100 Breakout

Published: March 10, 2026

The Australian Dollar (AUD) is currently showing resilience around the 0.7060-0.7080 range, recovering from recent geopolitical tensions. This recovery comes despite a 'war premium' due to the ongoing US-Israel-Iran conflict, which has historically pressured commodity-sensitive currencies like the AUD. However, Australia's status as a major energy exporter has helped mitigate some of this pressure.

Key Economic Indicators

• For the first time since 2017, Australian interest rates have surpassed U.S. rates, creating a favorable environment for carry trades that support long-term AUD strength.
• Markets are pricing in a 20-22% chance of a 25 basis points hike to 4.10% following a robust Q4 GDP growth of 2.6% year-on-year and persistent inflation near 3.8%.

Market Dynamics

The AUD/USD pair has decisively breached a descending trendline on the 4-hour chart, reclaiming the 50-EMA at 0.7060 and targeting a breakout above the 0.7100 pivot. The recent move above the trendline indicates a potential shift from a bearish structure to a more bullish outlook.

Geopolitical Impact

The escalating conflict in the Middle East has pushed crude oil prices above $100, increasing demand for the US Dollar as a safe haven. This risk-off environment typically pressures the AUD, but its recovery is supported by Australia's energy export role.

Policy Divergence: RBA vs. Fed

A significant factor supporting the AUD is the divergence in monetary policy between the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed). The RBA is poised to tighten policy to combat inflation, while the Fed is expected to cut rates due to a slowing labor market, which could lead to increased carry-trade inflows into the AUD.

Technical Analysis

The 4-hour chart shows that the AUD/USD has broken above key resistance levels, with bullish momentum indicated by the RSI climbing towards 60. A sustained breakout above 0.7100 could open the path to targets of 0.7146 and potentially higher.

Key Market Drivers

• Upcoming US CPI data: A lower-than-expected inflation print could weaken the DXY, allowing the AUD to surge.
• RBA meeting on March 17: Confirmation of a rate hike could catalyze a breakout above current resistance levels.
• Commodity prices: Stabilization in iron ore prices and signs of recovery in China provide a fundamental floor for the AUD.

Trade Strategy

Traders are advised to look for long entries on a sustained 4-hour close above 0.7100, targeting 0.7145 and 0.7200, with a stop-loss placed below the 0.7050 support zone.