The Australian Dollar (AUD) extended its gains against the US Dollar (USD) on Wednesday, climbing above the 0.7170 level as risk appetite improved in global markets. At the time of writing, the AUD/USD pair traded at 0.7173, marking a 0.72% increase for the day [1]. The rally was driven by speculation of a de-escalation in the ongoing conflict, with rumors of a possible two-week ceasefire extension reported by Bloomberg. US President Donald Trump commented that the war was 'close to over,' but stated he does not believe a ceasefire extension is necessary due to ongoing negotiations [1].
Oil prices remained relatively stable, with WTI holding above $91 despite posting losses of nearly 0.80%. The Federal Reserve's Beige Book noted that economic activity in the US increased and employment remained steady, although the conflict in the Middle East was cited as a 'major source of uncertainty' affecting hiring, pricing, and capital investment decisions. Many firms have adopted a 'wait-and-see' approach in response to these uncertainties [1].
US inflation data showed the March Producer Price Index (PPI) rising to 4%, which has kept the Federal Reserve cautious about shifting monetary policy for 2026. Alberto Musalem from the St. Louis Fed indicated that higher oil prices could broaden into core inflation, potentially pushing underlying inflation to just below or around 3% [1].
In Australia, upcoming jobs data is expected to show an addition of 20,000 jobs in March, with the unemployment rate forecast to remain unchanged at 4.3%. A stronger-than-expected jobs report could increase pressure on the Reserve Bank of Australia (RBA) to tighten monetary policy, with expectations for at least 54 basis points of rate hikes by year-end, implying two 25-basis-point increases. The probability of a rate hike at the next RBA meeting stands at 66% [1].
Technical analysis suggests a bullish near-term outlook for AUD/USD, as the pair holds above key support levels, including the triple simple moving average cluster around 0.7037 and the rising trend-line break at 0.7043. The Relative Strength Index (RSI) at approximately 66 indicates firm but not extreme buying momentum, suggesting the advance could continue if the pair remains above these support bands. Resistance is seen at 0.7440 and 0.7685, while a sustained move below 0.7037 would weaken the constructive structure [1].
CONCLUSION
The AUD/USD pair has benefited from improved risk sentiment and expectations of RBA rate hikes, supported by stable oil prices and positive technical signals. Market participants are closely watching upcoming Australian jobs data and developments in the conflict for further direction. The outlook remains bullish as long as the pair stays above key support levels.