AUD/USD Price Forecast: Bulls Target Yearly Highs After Breakout

The Australian dollar extended its strength on Friday, closing up over 0.82% and posting a weekly gain of more than 1.20%. Broad US dollar weakness drove the move after the US Treasury announced plans to buy back long-end bonds of the yield curve, sending the greenback sharply lower. The pair rebounded from support near the 0.7067 area and accelerated higher, reaching its highest level since September 18.

**Technical Breakout Confirms Short-Term Bullish Bias**

On the technical front, the latest rally confirms an effective breakout above prior key resistance. The 0.7146 level, which had previously capped upside, has been reclaimed and converted into key support, according to market analysis. The daily Relative Strength Index (RSI) near 67 shows momentum is hot but still constructive, while a slightly positive MACD reading above the zero line lends support, further validating the short-term bullish outlook. The next major target for bulls is the 0.7270 level, a region not tested since June 2022.

**Fundamentals and Policy Expectations Provide Support**

The US dollar hovers near three-month lows as market bets for an immediate Federal Reserve rate hike cool, a key factor underpinning the AUD/USD pair. Meanwhile, traders are nearly certain the Reserve Bank of Australia will hold rates steady on December 9, with stable policy expectations also providing a foundation for the Aussie. In addition, the International Energy Agency's announcement to release strategic petroleum reserves boosted commodity-linked currencies, with the Australian dollar also benefiting.

**Key Levels and Potential Risks**

On the upside, the 78.6% Fibonacci retracement level at 0.7188 may temporarily cap gains, and sustained trading above this resistance is needed to unlock larger upside potential. Initial support to the downside sits at the 61.8% retracement of 0.7119, with the stronger structural floor formed by the 50.0% retracement at 0.7070 and the nearby 100-day simple moving average at 0.7069. A fall back below 0.7146 would form a so-called "failed breakout," potentially triggering a rapid and sharp reversal.