The AUD/USD exchange rate has been on an upward trajectory, achieving its peak level since October of the previous year. The value increased to a peak of 0.6715, significantly surpassing this month’s low of 0.6440, driven by a surge in commodity prices and an increasing likelihood of divergence between the Reserve Bank of Australia and the Federal Reserve. The AUD/USD pair maintained its upward momentum as expectations grew that the RBA and the Federal Reserve would follow differing trajectories.
The Fed has already reduced interest rates three times this year and indicated that it may persist with this approach in the upcoming year. Donald Trump has committed to nominating a Fed Chair who will implement interest rate cuts. Consequently, it is probable that the bank will implement additional reductions in 2026. Nonetheless, there exists a possibility that other Fed officials may resist these reductions, particularly if inflation continues to exceed the 2% target.
In the meantime, the likelihood exists that the RBA may either increase interest rates or keep them unchanged in the upcoming meetings. Officials have indicated that they will take their time with rate cuts, particularly if inflation continues to stay high. Recent data indicated that inflation in Australia has persisted in its upward trajectory, a trend that could extend into the upcoming months. The rising commodity prices are positively influencing the AUD/USD pair. Leading commodities such as copper, gold, and silver have experienced significant increases over the past few months. Iron ore is experiencing an upward trend. Historically, the Australian dollar has served as a proxy for commodities due to the significant volumes it exports to China.
The daily chart indicates that the AUD/USD exchange rate has experienced a robust upward trend over the past few weeks. The asset experienced an increase, surpassing the significant resistance threshold of 0.6685, which was the prior year-to-date peak. The pair has surged past all moving averages and the Supertrend indicator. Additionally, leading indicators such as the Relative Strength Index and the MACD have maintained their upward trajectory. Consequently, the pair is expected to maintain its upward trajectory as buyers aim for the next significant resistance level at 0.6800. A decline beneath the critical support level at 0.6600 will negate the optimistic perspective.