AUD Tops 0.7000 After RBA Hike; USD Weakens Today!

Introduction

The Australian dollar staged a decisive advance this week after the Reserve Bank of Australia (RBA) delivered an unexpected 25 basis-point increase to the cash rate on February 3, taking it to 3.85%. The move — the RBA’s first hike since 2023 — triggered a sharp repricing of yield expectations and pushed AUD/USD above the 0.7000 mark for the first weekly close since early 2023. Traders reacted to firm domestic data, commodity resilience and relative weakness in the U.S. dollar, producing one of the AUD’s largest weekly gains in recent months.

What Happened This Week

RBA surprise and immediate FX reaction

The RBA’s 25bp hike surprised many market participants and sent a clear signal that policymakers are responding to persistent inflation pressures. In the hours after the decision the Australian dollar strengthened sharply — AUD/USD climbed above 0.7000 and closed the week around 0.7013. The stronger yield environment for Australian assets made AUD more attractive to carry and yield-sensitive flows.

Macro and flow drivers

Several concrete factors amplified the move:

• Domestic strength: Recent Australian employment and activity indicators have been firmer than expected, reducing the perceived need for policy easing and increasing the odds of further tightening later in the year.
• Commodities: Higher commodity prices supported export receipts and terms of trade, a structural support for the currency.
• USD softness: The U.S. dollar weakened across key pairs, contributing to a roughly 0.8% decline in the USD/AUD cross — translating to AUD appreciation in USD terms.
• Hedge flows: Institutional shifts in hedging by superannuation funds were cited as an additional source of AUD demand, reducing natural offshore hedging and increasing spot AUD purchases.

Recent Price and Volume Facts

Key levels and weekly performance

Concrete rate and price checks from the week include:

• RBA cash rate: increased by 25bp to 3.85% (Feb 3).
• AUD/USD weekly close: ~0.7013 — first weekly close above 0.7000 since January 2023.
• Weekly move: AUD/USD rallied ~3.2% in the prior week, the biggest one-week gain since April 2025 for the pair.
• USD/AUD intraday range (week): roughly between 1.4462 and 1.4243, reflecting an overall USD depreciation versus AUD of about 0.8%.

Market-implied policy odds

Following the RBA’s decision, market pricing shifted: modest odds were assigned to another 25bp move at the March meeting, while later-month tightening expectations increased. Traders will be watching inflation prints and RBA commentary closely to update those odds.

Technical and Trading Implications

Support and resistance

From a technical perspective, the 0.7000 level is now a key psychological support for AUD/USD. On a break higher, the next resistance cluster sits near 0.7150–0.7200 where prior supply and moving averages converge. Conversely, a reversal below 0.6900 would signal loss of this week’s momentum and open the path to lower intraday bands.

Practical trade considerations

Short-term traders should account for elevated volatility around central bank commentary and major data releases. Position sizing is essential: sudden reversals are possible if incoming U.S. data boosts Fed tightening expectations, or if Australian CPI disappoints. Use of stop-losses and staggered entries can help manage risk given the speed of recent moves.

What to Watch Next

Key hard data and announcements that will influence USD/AUD in the near term include:

• Australian Q4 CPI and monthly inflation details — confirmation of persistent inflation would reinforce RBA hawkishness.
• Westpac consumer confidence and NAB business sentiment surveys — provide updates on domestic demand momentum.
• RBA speeches and meeting minutes — clues on the board’s policy path and reaction function.
• U.S. macro releases (employment, inflation) and any shifts in Fed pricing that could lift the U.S. dollar.

Conclusion

This week’s RBA decision and the immediate flow response materially altered the USD/AUD dynamic: a surprise rate rise, firmer domestic data and commodity support drove AUD above the 0.7000 threshold and produced the pair’s largest weekly gain in months. Traders should remain focused on upcoming Australian inflation data, central-bank communications and U.S. economic indicators to assess whether this repricing will persist or prove a temporary adjustment.