Australian Dollar Forecast: Will the 0.7120 Breakout Trigger a Run to 0.7200?

The AUD/USD pair is currently in a high-stakes game – on March 20, 2026 it’s trading at around 0.7088 – as the Aussie looks to make the transition from a correctional bounce back into a a serious long-term uptrend. Its done alright so far this year, up by nearly 13% over the past 12 months, but its about to hit a wall in the form of a strong downtrend line which has been capping every rally since it peaked at 0.7180.

With the RBA still looking pretty hawkish after 2 rate hikes that put the cash rate up to 4.10%, the market is starting to wonder if the Aussie economy is still strong enough to hold its own in a world that’s pretty obsessed with the safety of the US dollar as its index peaks at 99.70.

RBA Hawkishness: 4.10% Cash Rate and the Hormuz Inflation Threat

The main reason for the Australian Dollar’s strength going forward is still the big gap between the RBA’s interest rates and the more cautious approach being taken by the US Federal Reserve.

Jobs market holding steady: The jobs figures in February were way ahead of expectations with a whopping 48,900 new jobs landing. That tells us the Aussie economy can more than handle another few interest rate hikes.

The looming threat of energy driven inflation: RBA Governor Michele Bullock has been talking about the Middle East situation getting more serious and the potential for big price hikes as a result of possible disruptions in the Strait of Hormuz. If that happens oil prices could easily top $100.

Markets already priced in more rate hikes: People are pretty much certain the RBA will keep hiking rates and that’s good news for the Aussie dollar. The markets are pretty confident of another hike by May or August 2026 and that’s stopping the AUD from falling too far every time there’s a dip.

Geopolitical Friction: The DXY Safe-Haven vs. Commodity Haven

The Australian Dollar is caught in a tight spot right now, locked in a kind of precarious haven tug-of-war with the US-Israel-Iran situation hurtling into a make-or-break phase.

US Dollars Standing Strong: The US Dollar Index has been hanging in there, stuck between 99.4 and 99.7 – a small range but pretty solid considering the safe-haven bids flooding in and a reevaluation of what the Fed has in mind with regards to “higher-for-longer” interest rates in the face of growing global uncertainty.

Who’d Have Thought?: The fact that oil prices are going through the roof – which is usually bad news for inflation – is instead serving up a mixed bag for the AUD. Like a strange sort of silver lining, it happens to suit Australia perfectly as a net exporter of energy, allowing the Aussie to perform better than other risk currencies when the going gets rough.

A Little Bit of Breathing Room: With iron ore prices stabilizing and some positive signals from China on manufacturing, we’ve got a tiny bit more reason to believe the AUD’s got some fundamentals working in its favour – even if the overall mood out there in the markets is still pretty jittery.

AUD/USD Technical Analysis: The 0.7120 Breakout Zone

On the 4-hour chart, AUD/USD is building up a bit of a pressure cooker, with the price basically ricocheting off of support and resistance lines as it creeps up into a rising wedge that’s starting to get pretty tight against that descending resistance line. To our relief, price has now reclaimed the 50-period moving average, and those higher lows from 0.6990 are starting to tell us that its looking like the buyers are getting the upper hand and absorbing some of that supply that’s been weighing us down.

If we can close above 0.7120 on the 4-hour chart, that’d confirm a major breakout – which just so happens to expose the next level of resistance, that horizontal one at 0.7153 and that prior swing high at 0.7183.

The RSI has pushed up past 55, which tells us momentum is likely on the rise, but we’re still a ways off from getting to overbought territory, so there’s still room to run before things get dicey. But then again, a failure at the 0.7090–0.7120 zone and we’re looking back toward 0.7017 support in no time.

If the price slips below 0.6990, we’ll be looking at a whole different picture – one that would put the recovery thesis right out the window.

Bottom Line: AUD/USD is right on the cusp of something big, friends – and we’re keeping a close eye on that 0.7120 resistance level as the FOMC follow-up commentary starts to roll in.