Australian Dollar Forecast: AUD/USD Faces Geopolitical Stress Test as Bulls Eye 0.7140 Breakout

The Australian Dollar is caught between some fairly solid local economic data and global investors looking to park their cash in safer assets. As of Thursday, March 5, 2026, AUD/USD is trading around 0.7053 after a bit of a wild week that pushed it all the way down to a four-week low of 0.7000.

Whilst the U.S. Dollar is still benefiting from all the global tension going on, several positive factors right here at home – strong GDP, a hawkish RBA and rising commodity prices – are helping to support the Australian Dollar.

The Fundamental Drivers: GDP Beats, Bullock Warns

Australian economy’s showing a lot more resilience than people thought it would, which is making it harder for the Reserve Bank of Australia (RBA) to achieve the stability they’re looking for.

GDP Surprise: On March 4, we got some official data that showed the Australian economy grew by 0.8% in Q4 2025 – way above what the markets were expecting at 0.6%. Annual growth is now 2.6% – the fastest in nearly three years, driven by a surge in mining profits (+5.7%) and some pretty healthy public investment.

The Bullock Pivot: RBA Governor Michele Bullock was speaking with a lot more confidence at the AFR Business Summit, warning that demand is now higher than supply and that each meeting could bring a policy change. Now markets are seeing a 30% chance of a rate hike on March 17, and expecting a full 25 basis point increase to 4.10% by May.

Commodity Shield: As an energy exporter, Australia’s somewhat protected from the recent oil price shock. WTI Crude prices are up above $70 for the first time in 30 months, which is helping to support the Australian Dollar – even as global investors are getting a bit more cautious.

Geopolitical Headwinds: The “Epic Fury” Effect

Despite some positive news at home, the Australian Dollar is still feeling the impact of the growing U.S.-Israel-Iran conflict (Operation Epic Fury).

Safe-Haven Squeeze: The U.S. Dollar Index (DXY) rose to about 98.78 this week as investors moved their money into the U.S. Dollar after the strike in Tehran.

The “Wait-and-See” Pause: The U.S. Dollar rally slowed on Thursday after we got some unconfirmed reports that Iranian intelligence might be open to talks. This bit of cautious optimism’s helped AUD/USD stay above the important 0.7030 support level.

AUD/USD Technical Analysis: The 0.7033 Support vs. 0.7140 Resistance

On the 4-hour chart, AUD/USD is currently trading in a pretty tight range.  A downward trendline from the 0.7225 high is still capping the upside moves. We just saw the pair fail to reach 0.7136, which shows that sellers are working overtime to keep the price down.

AUD/USD’s nearest support is at 0.7033. If the price closes below this level for the day, we could see a drop towards 0.6980, which is where the 50-day moving average is.

The RSI’s moving lower and is now near 45, which suggests we’re looking at a neutral to bearish outlook. Unless the RSI gets back up above 50, the price is more likely to fall than rise.

Key Trading Levels to Watch

Some key trading levels to keep an eye on are a bullish breakout trigger at 0.7140, where a clean break above this resistance would be a pretty clear sign of a structural reversal to 0.7200. Our immediate resistance sits at 0.7091, which is aligned with the 50-EMA that’s flattened and is currently capping our intraday gains.

On the downside, we’ve got some critical support between 0.7020 and 0.7030 – often considered the “line in the sand” for the bulls. If we can’t hold this zone, we’re looking at a deeper decline towards 0.6980.

The Analyst’s Verdict: Watch the NFP Open

Traders are likely to stay pretty nimble ahead of Friday’s U.S. Non-Farm Payrolls (NFP). While the RBA is hawkish and the Australian economy’s booming, a “hot” U.S. jobs report (>100k) could supercharge the USD and force a breakdown towards 0.6900.

Trade idea: If there’s a confirmed move above 0.7140, consider buying with a target of 0.7180. Alternatively, if the price stays below 0.7030, consider selling with a target of 0.6980.