Australian Dollar Forecast: AUD/USD Bulls Target 0.7186 After RBA Hikes to 4.10%

The AUD/USD pair is currently undergoing a pretty decisive recovery phase, hovering around the 0.7060- 0.7087 mark on March 17, 2026. It comes as no surprise that this rebound is a direct result of the Reserve Bank of Australia’s (RBA) decision to raise the official cash rate by 25 basis points to 4.10%, marking the second consecutive monthly hike this year.

Just like the previous increase, this one was made in a narrow 5-4 split vote but the overall tone of the RBA’s statement was unmistakably hawkish, pointing out a “real risk” that inflation will stick around at higher-than-target levels for a while longer because of the fuel prices and domestic capacity pressures that are really starting to rev up.

This pretty aggressive turn of policy has actually anchored the Aussie well above that critical 0.7000 level even as safe haven demand for USD persists because of the ongoing conflict in the Middle East.

RBA Hawkishness and the Middle East Energy Boom

The main driver behind the RBA’s decision to hike interest rates two months in a row is basically the worst-case scenario for the economy given a massive energy price shock combined with a super tight domestic labor market.

Governor Michele Bullock highlighted that while the global inflation has started to come down from its peak in 2022, it’s actually picked up significantly in the second half of 2025, with recent hostilities in the Middle East causing petrol prices in Australia to shoot up above $2.20 per liter.

The board is still pretty concerned that the Australian economy is running at a pace that’s way beyond what can be sustained. The growth in the latter part of 2025 far exceeded all the forecasts, and that’s creating a rather interesting divergence between the RBA and the Federal Reserve – markets are now pricing in a potential move all the way up to 4.35% by the end of the year – that’s in contrast to the Fed which is grappling with cooling labor data.

China’s Economic Resilience and Commodity Tailwinds

Helping the Aussie along are actually pretty strong economic indicators coming out of China, Australia’s largest trading partner. Just recently we’ve seen that China’s Retail Sales rose 2.8% y/y in February, beating all the forecasts, while Industrial Production surged 6.3% y/y, way outperforming expectations.

This resilience in the resources sector is basically what’s stabilizing demand for iron ore and LNG from Australia – providing a solid fundamental floor for the currency even when the world is feeling pretty risk averse.

Of course, “war jitters” from the US-Israeli conflict with Iran have perhaps knocked on the door of gains a few times but because Australia is a net energy exporter, it means the AUD can actually act as a unique kind of volatility hedge, unlike other G10 currencies.

AUD/USD Price Prediction: Can the Aussie Reclaim 0.7108 and Hit 0.7186?

Technically speaking, the AUD/USD pair has actually done a pretty good job of forming a higher-low base near the 0.7000 support zone – which just so happens to be in line with a major ascending trendline and some previous swing lows. The pair has recently reclaimed the 0.5 Fibonacci level at around $0.7073 on the 2-hour chart, which actually signals that the correction from the March highs may be nearing its end.

Support Level: The 0.7058 level (200-period MA) serves as a pretty important structural “line in the sand” for the bulls to keep the current recovery momentum going.

Momentum Outlook: The RSI has pushed above 50, indicating that the pressure from the bulls is actually strengthening as the market digests the split RBA decision and that very hawkish guidance.

Resistance Targets: If we can get a sustained 4-hour close above the 0.618 retracement at 0.7108 then that would actually shift the short-term bias back in a pretty bullish direction, targeting a retest of that 0.7186 yearly high.

Trade Idea: Look for long entries above 0.7108 – targeting a trend extension all the way up to 0.7186 – with a protective stop-loss placed below the 0.7058 support zone.