The Australian dollar climbed sharply against the US dollar, rising from 0.6979 to 0.7101, according to strategists Lee and Quek. They describe the rebound as stretched in the near term, but still see scope for gains toward 0.7120, with only limited momentum to push beyond 0.7155.
Key levels: support and resistance in focus
Lee and Quek highlight immediate support at 0.7085 and 0.7065, with 0.7155 flagged as a strong resistance cap.
- a drop below 0.7030 would undercut the current upward momentum, and
- a sustained move higher will require the pair to hold above the cited support area.
Broader trend remains bearish
Despite the recent bounce, the analysts argue that the broader technical structure for AUD/USD is still tilted to the downside over the coming weeks.
They point to the 0.6850–0.6870 band as a critical support zone. A break below this range could accelerate losses toward 0.6765, the next notable downside target. The late-March close near 0.6885 continues to define the lower boundary of the prevailing bearish trend.
Rate gap favors the US dollar
The technical backdrop is reinforced by a fundamental bias toward the US dollar.
- The Reserve Bank of Australia has kept its cash rate at 4.35%.
- The US Federal Reserve maintains a higher target range of 5.25% to 5.50%.
This rate differential supports the greenback and limits the durability of Australian dollar rallies.
Commodity weakness adds pressure on the aussie
Further pressure comes from softer commodity markets. Iron ore, one of Australia’s key exports, has fallen more than 15% since the start of the year and now trades below $110 per tonne. This decline undermines Australia’s terms of trade and acts as another headwind for its currency.
Data-dependent and fragile short-term upside
For traders, the current environment presents a split view:
- near term: room for a modest extension higher, but
- medium term: a weak fundamental and technical backdrop that leaves gains vulnerable to reversal.
Moves in AUD/USD are likely to remain sensitive to incoming US and Australian data, especially in a market already tilted in favor of the stronger US dollar.
Inflation trends support the greenback
Recent US data showed annual inflation at 3.5% in March, prompting markets to delay expectations for Federal Reserve rate cuts and lending fresh support to the dollar.
In Australia, quarterly inflation stands at 4.1%. While this signals slower, but still persistent, price pressures, it has not been enough to shift expectations materially in favor of the Australian currency.
What a break of 0.7030 could signal
Lee and Quek caution that failure to hold above 0.7030 would likely be read as confirmation of underlying weakness.
- trigger a quick slide back toward the 0.6850 area, and
- reassert the broader downside as the path of least resistance.
In short, the Australian dollar’s rebound has room to run in the very near term, but the dominant story for now remains a bearish multi-week trend framed by strong US rates, weaker commodities, and fragile upside momentum.
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