AUD/USD Outlook: Buyers Dominate Above 0.7100; Potential for Range Breakout

AUD/USD Holds Firm Despite Slight Pullback

The AUD/USD currency pair is experiencing a modest decline during early European trading on Thursday, following a robust advance the previous day. Despite this minor setback, the pair remains above the 0.7100 threshold, supported by several favorable factors that could encourage further gains.

Fresh Australian monthly inflation data released on Wednesday has heightened expectations that the Reserve Bank of Australia (RBA) may opt for another rate increase in May, lending support to the Australian Dollar. Meanwhile, the US Dollar is under pressure as uncertainty persists around US President Donald Trump's trade strategies. This, combined with a generally upbeat mood in equity markets, reinforces the short-term optimistic prospects for AUD/USD.

Wednesday’s breakout above a resistance level that had capped prices for over a week near 0.7100 acted as a catalyst for buyers. The pair also remains above the ascending 100-period Exponential Moving Average (EMA) on the 4-hour chart, indicating that the recent upward momentum is still intact. Additionally, the MACD indicator is positioned just above its signal line in positive territory, and the histogram, though not large, points to continued buying interest on pullbacks.

The Relative Strength Index (RSI) currently reads 58, staying above the midpoint and reflecting healthy, though not excessive, bullish momentum. The nearest support is found at 0.7080, with stronger backing at 0.7040, which aligns with the 100-period EMA. A drop below 0.7040 could undermine the bullish outlook. On the upside, the first resistance appears at 0.7125, just above recent peaks, and a decisive move higher could pave the way for a test of the 0.7170 resistance area.

This technical analysis was generated with assistance from an AI tool.

AUD/USD 4-Hour Technical Overview