AUD/USD Breaks Higher as Markets Price In More RBA Tightening

Australia’s labour market remains steady, with unemployment holding at 4.3% in March, matching expectations. Employment rose 18,000, supported by a strong 53,000 increase in full-time jobs, while hours worked also increased. Although underemployment edged slightly higher, overall labour conditions still point to ongoing wage and inflation pressure.

At the same time, consumer inflation expectations jumped to 5.9%, the highest since late 2022, partly due to higher oil prices. This has increased expectations that the Reserve Bank of Australia (RBA) may keep tightening policy, with markets pricing about a 70% chance of a rate hike in April and another hike expected by year-end.

This more hawkish outlook has supported the Australian dollar, helping AUD/USD break above the key 0.7160 resistance level. If the price holds above this area, the pair could move toward 0.7200, with a larger upside target near 0.7283. On the downside, the 200 & 50 DMAs are immediate support with further support near the 0.6900 - 0.6840 zone.

Overall, AUD/USD remains supported by strong labour data and rising inflation expectations.

AUD/USD Daily Chart