AUD/USD Struggles Amid Mixed Market Signals

On Tuesday, the AUD/USD pair found itself in a sort of tug-of-war. Investors were navigating through a complicated mix of domestic policy expectations leaning hawkish and increased uncertainty in global trade.

Currently, AUD/USD fluctuates between 0.7040 and 0.7070, unable to maintain its recent gain toward the 0.7100 mark. It’s been this way, really, since February 12th.

On Monday, Australia saw some recovery, albeit alongside a stronger US dollar, boosted by statements from hawkish speakers from the Federal Reserve.

Let’s explore some factors at play for the AUD/USD pair.

Current Influences on AUD/USD

In a prior discussion, we touched on the potential for a pullback in AUD/USD. Right now, it seems to be decreasing gradually, yet the circumstances feel quite tough. The downside appears to be well-contained at this stage.

The Reserve Bank of Australia (RBA) could be a significant factor. Their policymakers are indicating that the battle against inflation is ongoing, especially after raising the policy rate to 3.85%. With expectations of an additional hike near 60 basis points this year, the outlook for the Australian dollar has shifted from bearish to a more cautious stance.

This context becomes even more crucial with upcoming Australian CPI data on the horizon.

The market anticipates a persistent reading for the CPI, expected at 3.7% year-over-year. This ongoing price pressure seems to create a kind of ‘yield floor’ for Australia.

In addition to inflation, Australia’s position is bolstered by a stable Chinese economy. The People’s Bank of China (PBOC) has kept the lending prime rate unchanged, which reinforces their focus on stability rather than stimulation. While this helps keep the Australian dollar from sharply declining, it hasn’t quite provided the momentum needed for a breakout.

The combination of CPI data and potential tariff risks is poised to dictate the next moves for AUD/USD. Traders are keenly observing the upcoming State of the Union address and any related tariff discussions.

Typically, rising trade tensions boost a ‘risk-off’ sentiment, which tends to favor the US dollar more than the Australian dollar.

Technical Outlook for AUD/USD

From a technical standpoint, AUD/USD has been stuck in a range for the last two weeks.

Traders are hoping that the CPI results will give the Australian dollar a jolt, perhaps allowing it to rise above that 0.7100 obstacle.

Recently, 0.7100 has become somewhat of a barrier.

If the bulls are set to regain control, the pair first needs to establish itself above this level.

Conversely, if there’s a break below, watch for the 100-day moving average to be crossed before the recent low of 0.7030 comes back into focus.

AUD/USD daily chart, February 24, 2026.