Strategic Re-entry Zones Emerge as AUDUSD Maintains its Bullish Dominance

Summary:

The absence of a fresh "lower low" in recent sessions suggests that bears currently lack the necessary conviction to break the underlying support structure.

Buy AUDUSD

End Time

CLOSED

0.70481

ENTRY

0.71450

TGT

0.69260

0.70777 +0.00029 +0.04%

232

Points

Profit

0.69260

0.70713

CLOSING

0.70481

ENTRY

0.71450

TGT

During its February policy deliberation, the Reserve Bank of Australia (RBA) elected to increase the Official Cash Rate by 25 basis points, elevating it to 3.85%. This decision was underpinned by the persistence of upside inflationary risks, with the Board signaling that further tightening remains a distinct possibility should economic conditions dictate.

Governor Michele Bullock reinforced this restrictive posture with a notably hawkish tone. "The Board remains uncertain whether current financial conditions are sufficiently restrictive to return inflation to the target midpoint within a reasonable timeframe," she observed. Furthermore, she cautioned that intensifying tensions in the Middle East are exerting upward pressure on prices, though she emphasized that the central bank remains fully equipped to intervene if necessary.

Market expectations have aligned with this firm orientation. According to recent data, investors are currently pricing in a 30% probability of another 25-basis point hike in March, while a subsequent tightening by May is now fully discounted. The RBA has reiterated its state of "high vigilance" regarding inflationary threats, particularly those stemming from energy costs within an increasingly volatile geopolitical landscape.

Stateside, Minneapolis Fed President Neel Kashkari addressed similar concerns at the Bloomberg Invest Conference, noting that while the conflict involving Iran could materially shift monetary policy, it is currently premature to quantify its exact inflationary footprint. This sentiment resonates with Federal Reserve Governor Stephen Miran, who recently offered a cautiously optimistic assessment of the U.S. financial landscape. Miran argued that the banking sector is currently "over-regulated," which may be hindering essential credit creation, though he characterized the labor market as significantly improved. Interestingly, Miran posited that the long-term integration of Artificial Intelligence would eventually act as a "profoundly disinflationary" force.

The minutes from the January FOMC meeting reinforced this patient approach. With several members favoring a "higher-for-longer" stance until inflation sustainably targets 2%, the CME FedWatch Tool now suggests a prolonged pause through March and April. Consequently, the probability of a June rate cut has diminished as markets recalibrate to a more hawkish reality. Geopolitical risks reached a fever pitch this week as Iran continued to deploy missile and drone strikes across the Persian Gulf. A drone strike on the U.S. Embassy in Riyadh marked a severe escalation, followed by the effective declaration to close the Strait of Hormuz—a critical maritime chokepoint.

In response, U.S. Secretary of State Marco Rubio indicated that Washington is preparing for a "major increase" in strikes within Iran over the next 24 hours. This follows President Donald Trump’s warning that a "big wave is coming," underscoring the risk of a protracted conflict and prompting the State Department to urge immediate departures from the region. Strategic Re-entry Zones Emerge as AUDUSD Maintains its Bullish Dominance_1

Strategic Re-entry Zones Emerge as AUDUSD Maintains its Bullish Dominance_1

Technical Analysis

From a technical perspective, AUD/USD recently executed a sharp rejection of the 0.6944 level, swiftly reclaiming its position above the 200-period Moving Average situated at 0.6965. With the 100-period Moving Average currently tracking at 0.7069, the pair’s primary bullish impulse remains the dominant force.

The absence of a fresh "lower low" in recent sessions suggests that bears currently lack the necessary conviction to break the underlying support structure. Consequently, we anticipate a renewed attempt by the bulls to challenge and breach the primary resistance handle at 0.7145.

Our momentum analysis via the RSI shows the indicator recently touched a low of 33—a level representing yearly extremes. This has created notable bullish divergences even at lower price points within the broader trend, providing a strong signal that the primary upward trajectory is poised for resumption.

Simultaneously, while the MACD histogram remains tentatively bearish, the red bars are visibly diminishing in size. With the signal lines oscillating just beneath the neutral threshold, an imminent bullish crossover accompanied by increasing histogram depth would provide the technical validation required to confirm the next leg of the rally. In this environment, long positions on corrective pullbacks toward dynamic support remain the preferred strategic approach.

Trading Recommendations

Trading direction: Buy

Entry price: 0.7047

Target price: 0.7145

Stop loss: 0.6926

Validity: Mar 13, 2026 15:00:00

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