AUD/USD Price Forecast: Positive Momentum Points to Further Upside

AUD/USD remained firm on Wednesday, trading near 0.71131 after hitting an intraday high of 0.7129 earlier, holding in recent elevated ranges. Broad US dollar weakness provided core support for the Australian dollar, while technical signals suggest the pair's positive momentum could drive further upside tests.

**US Dollar Weakness and Central Bank Policy Expectations Form Dual Drivers**

The sustained pressure on the US dollar index is the direct catalyst behind the Australian dollar's strength. Market analysts noted that if signs of a lasting resolution to geopolitical conflicts emerge, the dollar index could quickly retreat to the 95-96 level. Meanwhile, market expectations for Reserve Bank of Australia rate hikes continue to build. Citigroup analysts anticipate the RBA could raise rates again to 4.6% in May and June, which would make the Australian dollar the highest-yielding currency among major peers, with the interest rate differential advantage likely to keep attracting capital inflows, supporting the Aussie's outlook.

**Technical and Fundamental Alignment, Key Resistance Ahead**

From a technical perspective, after breaking above its recent consolidation range, AUD/USD momentum indicators are tilted positive, suggesting further upside room remains. On the fundamental side, Australia's economy is performing strongly, with inflation persistently above the central bank's target range, providing justification for continued policy tightening. However, the pair may face some resistance near 0.7150, and short-term direction still hinges on the risk of a dollar index rebound and evolving geopolitical developments.

**CNY Linkage Performance Also Worth Noting**

Among major currencies, the Chinese yuan has also shown resilience recently. Citigroup analysts noted that amid the current Middle East conflict, the yuan is the second-strongest major currency and the best performer among net energy-importing countries' currencies, demonstrating resilience to oil price spikes and energy supply disruptions. The bank expects USD/CNY (onshore) to gradually test the 6.75-6.80 level in Q2 2026, which could indirectly reflect the broader strength of Asia-Pacific currencies and indirectly create a favorable environment for the Australian dollar.