Comment: Aussie dollar's ascent: big test ahead

Audience Analytics

03/02/2026 08:03

Feb 3 (Reuters) - A significant jump in the Australian dollar on Tuesday suggests a potential revival of its uptrend against the U.S. dollar. However, a major hurdle remains that could impede further progress.

The Reserve Bank of Australia delivered an anticipated 25 basis point rate hike, accompanied by a hawkish statement from Governor Michele Bullock, who expressed concerns about entrenched inflation and noted that a sustained rise in the Australian dollar would aid in containing imported price pressures.

The AUD/USD based at 0.6909 Monday, climbing to 0.7033 early Tuesday following the RBA rate decision. It peaked at 0.7094 on January 29 and a two-day pullback threatened to trigger a reversal of the January 19-29 0.6668-0.7094 bull run.

The weekly chart gives a better indication of the challenge that faces the AUD. A long upper candlestick shadow for the week ending January 30 highlights the demand fade and the potential for a direction change. The spike to 0.7094 also dragged the weekly Relative Strength Index into overbought territory. Extreme RSI levels point to strength in the underlying trend but also the risk of further corrective pullbacks.

The long upper candle shadow also shows up on the monthly chart, but January price action closed above the 100-month moving average, a strong bullish signal. August 2014 was the last time AUD/USD closed above the 100-MMA.

Bolstered by a hawkish RBA and supportive technicals, AUD/USD seems poised to target a retest of its significant January 29 peak at 0.7094.

For more click on FXBUZ

AUD/USD Weekly Chart: https://fingfx.thomsonreuters.com/gfx/buzz/egvbbdaazvq/Pasted%20image%201770104805355.png

(Peter Stoneham is a Reuters market analyst. The views expressed are his own. Editing by Alison Williams)

((peter.stoneham@thomsonreuters.com))