18.02.202617:56 Forex Analysis & Reviews: AUD/USD. Analysis and Forecast

The AUD/USD pair is struggling to build on yesterday's rebound from the 0.7030–0.7025 level, facing renewed selling pressure. Spot prices have already lost 0.25% on the day amid moderate strengthening of the U.S. dollar. However, dollar bulls lack strong conviction given expectations of a dovish stance from the Federal Reserve.

In particular, Austan Goolsbee of the Federal Reserve Bank of Chicago stated on Tuesday that if inflation declines toward the 2% target this year, additional rate cuts may be possible. This aligns with last Friday's weak U.S. consumer inflation data, reinforcing the case for further Fed easing and limiting dollar gains.

Progress in U.S.–Iran nuclear negotiations reduces the risk of direct conflict and supports optimism in equity markets. This further restrains demand for the dollar as a safe haven, offering support to the risk-sensitive Australian dollar. Moreover, the hawkish stance of the Reserve Bank of Australia (RBA) is limiting downward pressure on AUD/USD. Earlier this month, the central bank raised the Official Cash Rate (OCR) for the first time in over two years, describing the labor market as overheated. The RBA also revised its GDP growth forecast upward to 2.1% by June and expects elevated inflation in 2026, leaving room for further rate hikes.

Such divergence from the dovish Fed calls for caution among AUD/USD bears.

For better trading opportunities, it is advisable to wait for the release of the FOMC minutes to gain clearer signals regarding the Fed's future monetary policy plans. Friday's U.S. Personal Consumption Expenditures (PCE) index will provide additional clarity on the direction of the U.S. dollar and, consequently, influence the pair's dynamics. Australia's monthly employment data, due later this week, may also inject further volatility into AUD/USD.

From a technical perspective, oscillators remain positive and the pair is trading above all key moving averages. The pair is currently holding below the 9-day EMA, targeting the psychological 0.7100 level. Bulls retain the advantage.