The Australian dollar bounced back to the $0.7200 mark on Thursday, climbing over 1% as a significant intervention by Japanese officials in the foreign exchange arena overshadowed strong U.S. economic data, causing the U.S. dollar to hit a seven-day low. The AUD/USD pair is currently hovering above 0.7200 after dipping to a low of 0.7110 earlier in the day.
Australia rebounds as RBA rate hike expectations and dollar weakness dominate US statistics
The drop in the U.S. dollar impacted financial markets noticeably, reflected in a 0.91% decline in the U.S. Dollar Index (DXY). This index, which measures the dollar’s performance against six other currencies, slid toward 98.00 after USD/JPY dropped over 400 pips during the Asia-Europe session on Thursday due to confirmed currency market intervention.
According to Reuters, “Japan intervened on Thursday to boost the yen against the dollar, marking its first official currency action in nearly two years, as per two sources familiar with the situation.”
Meanwhile, key central banks like the European Central Bank and the Bank of England are maintaining their tight policies as energy prices continue to rise, which strengthens the argument for holding interest rates steady for an extended period.
Recent data from the U.S. indicated economic growth for the first quarter of 2026 was 2%, slightly below the anticipated 2.3%. Investment in artificial intelligence and data centers shot up by 17.2%, a notable increase from the previous quarter’s 4.3% growth.
At the same time, the core PCE—the preferred inflation gauge for the Federal Reserve—rose by 3.2% year over year in March, which was in line with expectations, up from a nearly three-year peak of 3%. Also, new jobless claims rose by 189,000 for the week ending April 25, dropping from the expected 215,000.
RBA expects rate hike at May meeting
In Australia, economic data is set to include the producer price index (PPI) for the first quarter of 2026, following the latest consumer price index (CPI) release on April 28, which showed an increase of over 4.1% in the first quarter, up from 3.6%.
According to Prime Terminal data, money markets are pricing in a 70% likelihood that the Reserve Bank of Australia (RBA) will raise interest rates to 4.35% during its meeting on May 5.
In the U.S., the ISM Manufacturing PMI for April is expected to rise to 53, following an unexpectedly lower reading of 52.7 in March.
AUD/USD Price Forecast: Technical Outlook
Currently, AUD/USD is at 0.7201 on the daily chart. This position is above short-term uptrend line support at around 0.7074 and a cluster of simple moving averages (SMAs) centered at 0.7059, suggesting a generally positive market sentiment. The pair has also resumed its long-term downward trend, now adjusting the previous bearish line to create a lower bound between 0.8015-0.6472. The 14-day relative strength index is near 61, indicating strong but not excessive upside momentum.
In terms of support, the initial level is around 0.7201 as an intraday pivot, followed by the uptrend line near 0.7074 and the 50-200 day SMA band close to 0.7059. A more significant downtrend threshold at 0.6472 might come into play if a sharper correction occurs. On the other hand, if upward momentum continues, the next resistance band aligns with the anticipated higher uptrend structure, with the first significant ceiling appearing around 0.7558 and a broader upward target near 0.7858.
