AUD/USD drops close to 1% as it approaches the 0.7000 level

AUD/USD Experiences Notable Decline

The Australian Dollar to US Dollar exchange rate dropped by approximately 1% on Thursday, settling close to 0.7010 after briefly slipping below the significant 0.7000 mark during the day. This sharp retreat follows Tuesday’s upward movement, with two days of losses wiping out most of the week’s earlier gains. The currency pair remains confined within a 150-pip range, fluctuating between 0.7000 and the yearly high near 0.7150—a pattern that has persisted since early February.

Australian Economic Updates and RBA Policy Outlook

In February, the Reserve Bank of Australia (RBA) raised interest rates to 3.85%, marking its first hike since late 2023. Governor Michele Bullock indicated that the March meeting could see another increase. The fourth quarter GDP report released Wednesday revealed the economy grew by 0.8% in the final quarter of 2025, with annual expansion reaching 2.6%—the fastest rate since early 2023. Although these figures support expectations for further tightening, current market odds suggest only about a 30% likelihood of a March rate hike, while a move to 4.10% in May is fully anticipated. Rising Crude Oil prices, fueled by disruptions in the Strait of Hormuz and ongoing tensions with Iran, are intensifying inflation worries. Bullock highlighted this week that these developments could reignite inflationary pressures within Australia.

US Dollar Developments and Market Sentiment

On the US side, Federal Reserve officials remain divided over the prospect of further rate increases if inflation persists above target, though key policymakers maintain that rate cuts are still expected later this year. The US Dollar continues to benefit from safe-haven flows as the conflict involving Iran enters its sixth day. Investors are now focused on Friday’s Nonfarm Payrolls (NFP) report, with forecasts pointing to a gain of around 60,000 jobs for February—a significant slowdown compared to January’s robust 130,000 increase.

Technical Overview: AUD/USD Daily Chart

Currently, AUD/USD is trading at 0.7009. The short-term outlook remains slightly positive, as the pair stays above both the 50-day and 200-day exponential moving averages, supporting the ongoing upward trend despite the recent pullback from the 0.71 region. The Stochastic oscillator has moved down from overbought levels to a more neutral position, suggesting that upward momentum has slowed but not reversed, which is consistent with a temporary pause in the prevailing uptrend rather than a reversal.

Key Support and Resistance Levels

Immediate support is found at 0.6960, where the latest swing low coincides with the 50-day EMA. A drop below this level could lead to further declines toward 0.6920. Additional support is located near 0.6890, which marks the lower boundary of the late-January consolidation range. On the upside, resistance is seen at 0.7045 and 0.7085, with a daily close above 0.7120 needed to reinforce the broader bullish trend and pave the way for higher prices.

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