RBA Hike Pushes AUD Above 0.70; USD Softens Feb16.

RBA Hike Pushes AUD Above 0.70; USD Softens Feb16.

In the week of February 9–16, 2026, the AUD/USD pair moved sharply on clear, policy-driven news. The Reserve Bank of Australia (RBA) raised its cash rate by 25 basis points to 3.85% on February 5, responding to inflation running above the central bank’s target band. That decision — coupled with resilient Australian CPI — tightened yield differentials and sent the Australian dollar to its strongest levels versus the US dollar in more than two years.

What happened this week

RBA policy and inflation: the primary driver

The RBA’s 25bp increase and commentary highlighting ongoing inflation pressures were the main catalysts for AUD strength. Market-implied rates suggested further tightening, with traders pricing roughly 35–40bp of additional hikes through 2026. Higher Australian yields made AUD assets more attractive to yield-sensitive capital flows, pushing AUD/USD through the 0.7075–0.7100 zone at peak levels.

USD reaction and profit-taking

After the AUD advanced, the pair retraced slightly toward the 0.7000 level amid profit-taking and a modest USD recovery. Short-term USD strength stemmed from a mix of U.S. economic prints and political developments that briefly boosted safe-haven and dollar demand. The net result was a consolidation phase: AUD still stronger on the week, but with signs of short-term exhaustion.

Technical picture and key levels

Technical indicators this week showed both momentum and potential vulnerability:

• Near-term resistance: 0.7100 — the swing high reached after the RBA announcement.
• Immediate support: 0.7069 — the first level to confirm continued strength if held.
• Critical psychological level: 0.7000 — a break below this could trigger deeper retracement.
• Moving-average support: 50-day MA ≈ 0.7054, 100-day MA ≈ 0.7011, 200-day MA ≈ 0.6861.

Price action showed upper wicks on intraday candles and RSI readings entering overbought ranges — technical signs that short-term exhaustion or a pullback was plausible despite the fundamental bullish case for AUD.

How traders should position

Short-term tactical ideas

Traders looking for near-term opportunities can use the recent volatility to define risk. For example, fading sharp intraday rallies with tight stops above 0.7100 could capture profit-taking moves, while targeting the 0.7000–0.7069 band as initial take-profit zones. Alternatively, momentum traders who believe in continued RBA tightening may prefer entries on pullbacks toward the 50- to 100-day moving averages with stops under 0.7000.

Medium-term considerations

If the RBA continues to outpace the Fed in tightening — or if Australian inflation remains sticky — the structural case for a stronger AUD holds. Conversely, any sudden USD-driven risk-off episodes or unexpectedly strong U.S. inflation prints could reverse momentum quickly, so monitoring U.S. PPI, Fed commentary and major fiscal/political headlines remains essential.

Conclusion

This week’s RBA tightening decisively pushed AUD/USD above 0.70, reflecting a clear policy-driven move rather than speculative noise. Technical indicators and a modest USD rebound suggest room for short-term retracement, but the medium-term direction will depend on subsequent RBA/Fed communications and incoming inflation and jobs data from both economies. Traders should watch the 0.7069 and 0.7000 levels, and use moving-average supports to anchor risk-weighted positions.

Data-driven positioning and disciplined risk management remain key amid elevated volatility in the AUD/USD pair.