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December 29, 2025

AUD/USD Near 14-Month High After RBA Minutes Signal Possible Further Tightening

Market snapshot

Australian dollar strength accelerated after the Reserve Bank of Australia’s December minutes signalled the board is less confident that policy is currently sufficiently restrictive and is prepared to tighten again if Q4 Australian CPI (released Jan 28) does not ease. AUD/USD traded around 0.6720 — near a 14-month high (0.6724) — with daily technicals showing an ascending channel, price above the 9-day EMA and a 14‑day RSI reading of ~70 (overbought).

Why this matters

The RBA language increases the probability markets assign to a February 3 rate hike if incoming inflation surprises on the upside. That prospect, combined with signs of Chinese fiscal targeting toward advanced manufacturing and technology (Bloomberg reports) that would support commodity demand, is providing a bullish backdrop for the AUD. At the same time, PLA drills simulating a Taiwan blockade have raised regional geopolitical risk and could quickly flip sentiment to risk-off if escalation concerns rise.

Technical view — AUD/USD

Key technical levels and observations:

  • Immediate resistance: 0.6724 (recent high). A decisive break above that level would validate bullish momentum and open an extension toward the channel upper boundary near ~0.6830.
  • Short-term support: 9‑day EMA (~0.6683) and lower channel support near ~0.6660. Failure to clear 0.6724 could prompt a pullback to these levels.
  • Momentum: 14‑day RSI ~70 suggests overbought conditions; thin holiday liquidity can accentuate short-term swings.

Macro and geopolitical risks

Traders should monitor three near-term catalysts:

  • Q4 Australian CPI (Jan 28): Stronger-than-expected core inflation would increase the likelihood of an RBA hike and support AUD upside.
  • China demand: Beijing’s targeted investment program could lift commodity demand (iron ore) — supportive for AUD — but underperformance or weaker Chinese activity would weigh on the currency. See related coverage of the Chinese housing downturn and demand risks.
  • Geopolitical drills: PLA "Justice Mission 2025" exercises raise the possibility of risk-off flows that would hurt AUD and regional cyclicals (shipping, semiconductors).

Trading ideas and risk management

Possible setups for retail traders and short-term investors:

  • Breakout strategy: Consider long AUD/USD on a clear, sustained break and close above 0.6724 with a target toward 0.6830. Use a volatility‑adjusted stop below the breakout candle or under the 9‑day EMA to limit downside.
  • Pullback/dip-buy: If price retreats to the 9‑day EMA (~0.6683) or channel support (~0.6660), look for bullish reversal signals (bullish engulfing, RSI divergence) before adding. Place stops below the lower channel support and size positions for potential range expansion.
  • Risk-off contingency: Use clearly defined stop placement and consider hedges (e.g., options if available). Keep position sizes small during the holiday period and when geopolitical risk is elevated.

How automation can help

Short-term FX moves around important central-bank guidance and holiday liquidity can be rapid. Automated trading systems remove emotion from execution and can run pre-defined breakout, pullback, or hedge strategies 24/7. For traders who want to automate structured AUD/USD setups and manage intraday risk parameters, solutions like the Trade Assistant Bot or a tailored Forex Trading Bot can help execute entries, stop placement, and position sizing consistently. While this article focuses on forex trading, similar automated approaches apply to crypto trading setups where liquidity and volatility profiles differ.

Correlation and portfolio context

Remember AUD often correlates with commodity prices (iron ore, copper) and risk appetite. A sustained rise tied to commodity strength and RBA hawkishness benefits commodity-linked FX and related equities. Conversely, a geopolitical shock that trims risk appetite can push AUD lower even if domestic data remains firm. For earlier episodes of AUD strength tied to yields and technical breakouts, see AUD near three-year highs.

Conclusion

AUD/USD’s move to the 14‑month range reflects a mix of RBA hawkish language and optimism about Chinese fiscal targeting of advanced sectors. The pair’s technical setup is bullish but overbought; traders should balance breakout opportunities with clear risk controls given geopolitical and data risks ahead. Whether you trade manually or use automated trading tools, define scenarios for both continuation and reversal.

If you want to automate execution on these setups, consider testing an AI‑enabled solution at PlayOnBit — the platform offers bots that can implement systematic forex strategies and manage orders around critical events. Try the AI trading bot on PlayOnBit to backtest and run live AUD/USD strategies with disciplined risk management.