## AUD/USD Breaks 15-Month High – What Awaits the Australian Dollar?

The AUD/USD pair is once again surprising the markets, reaching levels seen a year and a half ago. On Wednesday, the Australian currency was trading around 0.6740, marking the fourth consecutive day of gains against the US dollar. Technically, the situation looks first-order – the price is moving within a clear upward channel, but the 14-day RSI at 70 loudly signals: beware of overbought conditions.

### Where are the targets, where is support?

Bulls are attacking the upper boundary of the channel near 0.6830. If we break through, there’s even more room to go higher. Support is located at the 9-day EMA (0.6708), followed by the lower boundary of the channel (0.6700). If that breaks, we could fall to the 50-day EMA near 0.6625.

### What’s behind the Australian dollar’s rise?

Inflation in Australia in November was 3.4% year-over-year – less than 3.8% in October, but above the RBA’s (2–3%) target. The trimmed mean CPI increased by 0.3% m/m and 3.2% y/y. Building permits rose by 15.2% m/m, reaching a four-year high of 18,406 units.

The Reserve Bank of Australia still has no intention of stopping its tightening cycle. The December minutes showed that policymakers are prepared for further hikes if inflation remains stubborn. The Q4 CPI report, due on January 28, will be crucial – data above expectations could push the RBA to hike as early as February 3.

### The US dollar is weighing

The dollar index (DXY) hovered around 98.60 ahead of key reports. The ISM Services PMI and JOLTs job openings are about to be released. Friday’s Nonfarm Payrolls are forecasted at 55,000 new jobs – below 64,000 in November.

Stephen Miran from the Fed board advocates for significant rate cuts this year to support growth. Meanwhile, Minneapolis Fed Chair Neel Kashkari warns of a potential spike in unemployment. The market prices in two cuts in 2026, and rumors of a new Fed chair replacing Powell are fueling discussions about a possible shift toward a more dovish policy.

ISM Manufacturing PMI in December fell to 47.9 – the lowest since October 2024 – signaling an acceleration of contraction in the manufacturing sector. Production and inventories are declining faster than expected.

### China – the unnoticed player

China’s Manufacturing PMI rose to 50.1 from 49.9, while Services PMI fell to 52.0. Australia’s trade ties with Beijing are strong – changes in Chinese activity directly impact the AUD.

Summary: The Australian dollar is gaining on divergence – the RBA remains hawkish, the Fed is considering cuts, and economic data show mixed signals. Technically, AUD/USD has the potential to reach 0.6830, but risks for the upside are increasing.