AUD/USD Price Forecast: Diplomacy Drains Dollar as Aussie Bulls Eye 0.7200

Traders are moving away from safe-haven dollars as reports surface that Tehran has handed Washington a new proposal via Pakistan to reopen the Strait of Hormuz and finally end this nine-week war. We’re watching the Dollar Index (DXY) slip to 98.27, a retreat that’s effectively erasing the war premium we’ve suffered through since late February. While crude oil remains stubbornly above $100, the currency market is front-running a diplomatic breakthrough. AUD/USD is the primary beneficiary. As a high-beta proxy for global risk, the Aussie doesn’t wait for signatures on a treaty before it starts sprinting.

RBA Tightening Expectations Anchor the Floor

Don’t let the risk-on noise distract you from the bedrock. The Reserve Bank of Australia is in a corner, trapped by energy-driven inflation that refuse to budge. With headline CPI expected to hit 4.7% in Wednesday’s report, the market has moved. ASX 30-day Interbank Cash Rate Futures are now pricing a 74% probability of a hike to 4.35% on May 5. That yield advantage is a magnet. I noticed the Australia 10Y vs US 10Y bond spread has widened to 65.5 basis points. Higher yields mean a stronger floor.

Weekly Breakout Keeps Bulls in Control

The weekly timeframe is a masterclass in structural resilience. We’ve witnessed a definitive break from a long, uneven base, and price is now pushing into the upper quadrant of its multi-year range. Buyers are defending the breakout zone with authority. It’s not a perfect line. But it is bullish. The sequence of higher lows since the 2025 bottom remains unbroken, and as long as we hold above the 0.7000 handle, the path of least resistance points toward 0.7280.

AUD/USD Weekly Breakout Strengthens Bullish Trend

AUD/USD weekly chart showing bullish breakout from long-term base

Source: TradingView

Daily Momentum Supports Positive Bias

The daily chart reveals a V-shaped recovery off the 0.7120 minor swing low, a move that forced the pair back above the 21-EMA. The market absorbed the weekend’s geopolitical jitters and used them as a springboard. The RSI is recovering toward 60, signaling we aren’t even overbought yet. There’s room to run. We target the 0.7180/0.7200 resistance cluster next.

AUD/USD Momentum Supports Positive Bias

AUD/USD daily chart showing higher lows and recovery toward resistance

Source: TradingView

Renko Bricks Confirm Short-Term Bullish Momentum

The 0.001 Renko is printing a rigid sequence of green continuation bricks. Noise is gone. Beneath the headlines, we see a structural transition that remains intact while we hold above 0.7090. The Z-score SMA momentum line is rising from neutral territory, providing statistical backup for the bulls. Don’t fight this tape. Short pullbacks are just liquidity grabs.

AUD/USD Renko Confirms Short-Term Bullish Momentum

AUD/USD 0.001 Renko showing green continuation bricks and rising momentum

Source: TradingView

The Verdict

Current Trend Direction: Bullish

Bias: Positive

Key Support Levels: 0.6833,0.7014,

Key Resistance Levels: 0.7200, 0.7300

Medium Term Path: I expect the AUD/USD to maintain its upward trajectory toward the 0.72–0.7300 zone, fueled by a cocktail of short-covering and a hawkish RBA, provided the 0.7090 pivotal support successfully absorbs any intraday profit-taking. Watch the Islamabad headlines. Diplomacy is the driver now.