AUD/USD Price Action: Aussie Bulls Eye $0.7050 Amid RBA Hawkishness and Geopolitical Optimism
During Monday’s European session, AUD/USD continued to rise, holding above 0.7025 and reaching a high of 0.7046. The move was driven...
Quick overview
- AUD/USD rose above 0.7025, reaching a high of 0.7046, driven by a hawkish stance from the RBA and easing AI-sector volatility.
- Australia's household spending declined by 0.4% in December, indicating the impact of the RBA's monetary policy despite ongoing service-sector inflation.
- Improved diplomatic relations between the US and Iran have boosted investor confidence, positively affecting the Australian Dollar.
- Attention is now on the upcoming US Non-Farm Payrolls report, which could influence the AUD/USD movement towards 0.7100 if weaker than expected.
During Monday’s European session, AUD/USD continued to rise, holding above 0.7025 and reaching a high of 0.7046. The move was driven by tighter domestic monetary policy, easing concerns about AI-sector volatility, and progress in diplomatic talks between Washington and Tehran.
RBA Hawkish Pivot Outweighs Cooling Household Spending
The Australian Dollar remains strong thanks to the Reserve Bank of Australia’s clear hawkish stance. Governor Michele Bullock recently explained the decision to raise the Official Cash Rate to 3.85%, saying the economy is more “capacity-constrained” than earlier thought.
While the RBA is trying to slow demand, new economic data shows the policy is starting to have an effect:
- Monthly Decline: Australia’s household spending dropped 0.4% in December 2025, missing the expected 0.2% increase.
- Annual Slowdown: Year-over-year growth cooled to 5.0%, down from 6.0% in November.
- Sector Impact: Discretionary categories like clothing (-2.4%) and furnishings (-1.7%) saw the sharpest pullbacks.
Even with the drop in spending, the RBA is still focused on ongoing service-sector inflation, which helps support the Australian Dollar.
Geopolitical Breakthrough: Iran-US Talks Spark Risk-On Sentiment
Improved relations between the US and Iran have also boosted the risk-sensitive Australian Dollar. Iranian President Masoud Pezeshkian called recent talks a “step forward,” and US President Donald Trump agreed, confirming more meetings are planned this week.
Although Trump warned of “serious consequences” if no deal is made, moving from military threats to the “Istanbul channel” for nuclear talks has calmed markets, increased investor confidence, and put pressure on the US Dollar.
Focus Shifts to Delayed US Jobs Report
Attention now shifts to the US, where the January Non-Farm Payrolls (NFP) report, delayed by a short government shutdown, is set to be released this Wednesday, February 11.
| Indicator | Market Forecast | Previous (Dec) |
| Non-Farm Payrolls | +70,000 | +50,000 |
| Unemployment Rate | 4.4% | 4.4% |
| Avg. Hourly Earnings (YoY) | 3.7% | 3.8% |
If the jobs report is weaker than expected, it could strengthen the view that the Federal Reserve will keep rates steady, which would support the AUD/USD moving toward 0.7100.
Technical Analysis: AUD/USD Breaks Descending Trendline
On the 2-hour chart, AUD/USD has broken above a descending trendline that limited price movement since late January. The pair is now forming higher lows from the 0.6945 level.
Key Support: Reclaimed the 0.7010–0.7030 zone, now acting as a primary support floor.
Indicators: The 50-period moving average has turned bullish, while the RSI at 55 suggests there is ample room for growth before reaching overbought conditions.
Fibonacci Levels: Having cleared the 50% retracement of the recent decline, the path is open toward the 0.7090 and 0.7125 resistance levels.
Trade Idea: Buy on dips near 0.7030, targeting 0.7120, with a protective stop-loss placed below 0.6980.
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