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January 29, 2026

AUD/USD Breaks 0.7000; Gold Extends Rally as Dollar Weakness Deepens

Market snapshot

A softer US Dollar (DXY ~96.00, near the lowest level since Feb 2022) is reshaping short-term opportunity sets across FX and commodities. The AUD/USD rally posted a daily close above 0.7000 for the first time since February 2023 after breaking a multi-week range, while gold (XAU/USD) extended a strong rally that has now lasted more than a week. These moves are underpinned by a combination of macro sentiment, central bank flows and technical momentum.

AUD/USD: breakout with overbought internals

Key technicals

AUD/USD closed above 0.7000, breaking out from the mid-0.6700s range that had dominated recent sessions. Momentum indicators confirm bullish bias: MACD is above its signal line and zero with a widening histogram, while price trades inside an ascending 1-hour channel. Immediate channel resistance sits near 0.7128 and channel-floor support near 0.7029. The 200-day SMA has acted as longer-term support since June 2025. For prior channel dynamics and support context, see channel support.

Risks and trade ideas

Daily RSI at ~87 signals overbought conditions — increasing the probability of a near-term consolidation or pullback. Traders can consider two tactical approaches: (1) momentum continuation trades targeting a breakout above 0.7128 with defined stops below recent swing lows, or (2) buy-the-dip entries on pullbacks toward the channel floor (~0.7029) for lower-risk exposure to the uptrend. Always size positions to withstand potential mean-reversion caused by profit-taking or a USD reversal.

Gold (XAU/USD): safe-haven demand meets structural support

Key technicals & drivers

Gold has extended a multi-day rally, breaking above a short-term ascending channel and trading significantly higher on safe-haven flows and central bank accumulation. Technicals show bullish MACD momentum, but RSI readings are extreme (around 88), flagging overbought conditions and raising the chance of a corrective leg. Recent similar episodes where the market priced Fed-cut odds can be seen in gold surges.

On the fundamental side, central banks continue to add to reserves, and gold’s inverse relationship with the US Dollar and US Treasury yields supports further upside if the dollar weakens or yields decline.

Risks and trade ideas

Key risks include a stronger US Dollar or rising Treasury yields that would likely pressure XAU/USD. For trades, consider momentum-based entries on pullbacks to breakout support, or shorter-duration mean-reversion strategies to capture corrective moves after rapid runs. Tight risk controls matter given the current overbought readings.

Macro context: why the dollar weakness matters

The Dollar’s near-term soft patch reflects a mix of policy uncertainty and flows favoring non-USD assets. The Fed left rates unchanged (3.50%–3.75%) and signaled a cautious path on cuts, but market positioning and geopolitical headlines are keeping the DXY near its recent lows. A softer dollar amplifies commodity and commodity-currency rallies — evident in both AUD and gold — and creates cross-asset trading opportunities, similar to the broader EUR/USD climb.

Trading implications and practical setups

For forex traders

With AUD/USD showing a clean breakout, consider disciplined momentum entries above short-term resistance, or pullback buys near the ascending channel floor. Use stop-losses just below the channel floor and define profit targets near 0.7128 and beyond if momentum continues.

For commodity/safe-haven traders

Gold’s structural support from central bank demand suggests medium-term bullish potential, but the extreme RSI warns of short-term corrections. Use staggered entries and consider hedging or smaller position sizes on initial exposure to manage volatility.

How automation can help

Volatile cross-asset moves like these are well suited to automated trading frameworks that enforce discipline, speed and risk controls. For example, a trend-following rule can capture continuation on AUD/USD breakouts while a mean-reversion rule can take advantage of short-lived pullbacks in XAU/USD. Retail traders can explore specialized tools such as the forex trading bot for currency strategies or the Trade Assistant Bot for multi-market signal execution and risk management.

Risk management checklist

  • Respect overbought signals: cap position sizes when RSI/MACD show extremes.
  • Define stop-loss and take-profit levels before execution.
  • Monitor DXY and US Treasury yields — reversals there can quickly change the trade landscape.
  • Use automation for consistent entry/exit discipline and to avoid emotional mistakes during fast moves.

Conclusion

Dollar weakness is amplifying moves across FX and commodities: AUD/USD has staged a meaningful breakout above 0.7000 while gold continues an extended rally backed by safe-haven flows and central bank buying. Both instruments offer actionable setups but carry clear overbought risks that demand disciplined risk controls.

If you want to combine systematic execution with these market themes, consider exploring automated trading solutions for faster, more consistent order management. Try a demo or live strategy with PlayOnBit and get started with tools like the Trade Assistant Bot or the forex trading bot.

Whether you trade discretionary or automated strategies, integrating disciplined risk management with technology can help you navigate the current USD-driven moves in forex and commodities. Start testing an AI trading bot on PlayOnBit today to explore automated trading and improve execution across forex trading and crypto trading setups.