The Australian dollar has been at the center stage of recent currency volatility, with the Royal Bank of Australia delivering a 25 bps hike in early February while most other global central banks are still discussing cuts. With rates priced in for further rises throughout 2026, participants still assess the potential for AUD and whether the central bank can really deliver a new hike cycle.
Among other Asian-Pacific currencies, the Australian dollar has been at the center stage of recent currency volatility, with the Reserve Bank of Australia delivering a 25 bps rate hike in early February.
This move contrasts sharply with the stance of many other global central banks, such as the Federal Reserve and the Bank of England, which are still considering cuts, suggesting the RBA is ready to fight inflation fiercely.
The decision follows a period of robust economic indicators, particularly significant gains in Australian employment observed throughout the end of 20251.
However, the primary driver of the RBA's action remains elevated inflation, which reached 3.8%2 year-over-year in December 2025 — well above the central bank's target range of a maximum 3%.
With market participants now pricing in the potential for further rate rises throughout 2026, the key question is whether the RBA can successfully deliver a sustained new hiking cycle and how this policy divergence will impact the Australian dollar's trajectory.
Traders are getting ready for a new wave of data this week, which will be pivotal in the confirmation of monetary policy pricing for the rest of the year (with the next RBA meeting on March 17) .
AUD/USD marked a recent extreme at 0.71470 after a +6% rise in the last 30 days alone, with January boasting the pair’s best performance since November 2022. With early 2023 highs now reached, high expectations for this week’s releases have stalled the action.
The 50-period moving average is acting as a key barometer for action, as can be seen throughout the early 2026 rise.
AUD/USD 4H chart, February 16, 2026. Source: TradingView. Past performance is not indicative of future results.
Resistance levels
- June 2022 extremes 0.72 to 0.7230
- 0.71470 past week highs
- 2023 highs from 0.71 to 0.7150 resistance (testing)
Support levels
- December 2021 lows 0.70 to 0.7050 major pivot
- 0.69 to 0.6945 early February support
- Micro-support 0.6850 (+/- 30 pips)
- September FOMC highs support 0.6680 to 0.6710
Footnotes:
This article and its contents are intended for educational purposes only and should not be considered trading advice. Forex trading is high-risk. Losses may exceed deposits.
