AUD/USD Forecast: Rising Oil and Global Tensions Test Aussie Strength

The Australian dollar has been strong in recent weeks, but the rally is starting to lose momentum. Even though AUD/USD is still holding above the 0.70 level, there are signs of caution in the market. Geopolitical tensions in the Middle East are a major factor. While higher commodity prices can support the Australian dollar, the 35% surge in oil prices could also reduce global risk appetite, which may pressure risk-sensitive currencies like the Aussie. Because of this, trading in AUD pairs could remain volatile and inconsistent until geopolitical tensions ease.

Recent price action across AUD pairs also shows mixed signals. AUD/USD ended its 6-week winning streak but managed to recover and close back above 0.70 after finding support near 0.69. Other pairs showed different movements: AUD/CAD turned bearish due to strong oil prices, AUD/NZD hit a 10-year high but showed indecision, GBP/AUD signalled a possible swing low, and EUR/AUD continued its long upward trend.

This week’s economic calendar includes important data such as China’s CPI and trade balance, and key US indicators, including core CPI, core PCE and jobless claims. However, geopolitical headlines from the Middle East may still dominate market direction, even though it is a rare week when both US CPI and PCE inflation data are released together.

Domestically, the Reserve Bank of Australia remains under pressure to raise interest rates, supported by strong GDP growth (2.6% year-on-year and 0.8% quarter-on-quarter) and ongoing inflation concerns. However, weak household spending growth suggests the central bank may wait longer before acting. Markets currently price about an 84% chance of a rate hike, with May seen as the more likely timing when more economic data becomes available.

Technically, 0.69 is the key support level for AUD/USD. As long as the price stays above this level, there is still potential for the pair to move toward the 2023 highs. The next move will likely depend on US inflation data, global risk sentiment, and whether Middle East tensions escalate or ease.

AUD/USD Daily Chart