Australian Dollar Forecast: Will the 0.6910 Support Hold as Softer CPI Clashes with a Hawkish RBA?

The AUD/USD is locked in a high-stakes game of tug-of-war on March 25th, 2026, trading at an uncertain 0.6972. Ever since a steep drop from the mid-March highs of 0.7185 the Aussie has been struggling to get back up to the psychologically important 0.7000 barrier.

Although a surprise drop in domestic inflation data has momentarily cooled the bulls, the overall story line is still being driven fiercely by a hawkish Reserve Bank of Australia and the volatile “war premium” from the ongoing US/Israel/Iran conflict.

The Inflation Paradox: Softer CPI vs. the 4.10% Cash Rate

Today’s price action is all about the tension between the latest Australian economic numbers and the RBA’s still pretty aggressive policy stance.

Mixed CPI Signals: The recent Consumer Price Index numbers came in a bit softer than expected which gave sellers some ammo to push the pair below 0.7000 early on.

RBA Commitment: Yet despite the dip in the data the market is still pretty confident that the RBA is going to keep hiking interest rates. Just three days before this, on March 17th, the Board put up the cash rate by 25 basis points to 4.10% – a tight 5-4 vote in favour and all because they reckon inflation in the service sector is “stuck” and energy prices are still putting pressure on the economy.

Labor Resilience: So with unemployment just a whisker away from 4.1%, the RBA is still waving a green light for them to prioritise keeping prices under control – and that’s given them a bit of an enviable advantage over other central banks who are starting to get a bit cautious and warning of oncoming danger.

Geopolitical Friction: “Commodity Haven” vs. Risk-Off USD

The Australian Dollar’s mantle as a premier risk-sensitive currency is getting a serious workout thanks to the shifting headlines out of the Middle East right now.

• Trump’s Strike Delay: A bit of hope for temporary calm followed the US President’s decision to hold off on strikes against Iranian infrastructure – a move that’s taken some of the pressure off the USD as a safe bet, giving the AUD a bit of a floor at least.
• Energy Export Strength: As it just so happens Australia is a net energy exporter, which means it’s cashing in on the current high prices for LNG and coal. Even with oil pulling back from those crazy highs above $119, the demand for Australian resources is strong and that’s providing a bit of a safety net that not all of its G10 peers can claim.

The 2026 Outlook: Lots of smart folks out there, including some of the analysts at ING, are sticking with their year-end targets for the AUD of 0.74 and reckon that the signs are pointing to a “risk on” move by the end of next year. They think that the Aussie will come out on top as policy makers start to diverge and China’s economy starts to stabilize – in time at least to override all the short-term anxiety about the Iran thing.

AUD/USD Technical Outlook: Downtrend Persists Below 0.7010

AUD/USD just managed to scrape together a trading price of 0.6972 on the 2 hour chart – but unfortunately it’s still not making much progress in the way of momentum on the back of its failed attempts to get above a descending trendline that’s been drawn through the highs around 0.7160.

To make matters worse, the pair is currently finding itself stuck beneath both its 50 and 200 period moving averages, with the 50 period one floating around 0.7010 and the 200 period one hovering somewhere closer to 0.7060 – all of which is adding to the sense of bearish pressure.

Price was able to momentarily bounce back up off the 0.6910-0.6920 support zone but is now running up against immediate resistance at 0.7010 in the latest trading session – and that’s a fairly key technical level if it breaks. If it does manage to break above that level, then we could see the price move towards 0.7060 with a possible follow up higher towards 0.7096.  

On the other hand, if the price fails to hold up above 0.6953 we could see the 0.6910 level get tested, followed by even deeper support somewhere around 0.6871. Unless AUD/USD somehow manages to get back above 0.7010 in a convincing way then the bigger picture is still looking pretty downbeat – and that’s in the prevailing market conditions at the moment.