AUD/USD rose nearly 1% on Tuesday and reached a three-year high of 0.7168 before easing to 0.7131. The move followed speculation that the Reserve Bank of Australia could raise rates at its March meeting. The pair remains above 0.7100, with focus on whether it can close above that level on a daily basis. The Relative Strength Index is at 64, and a move above its prior peak would point to stronger momentum.

Key Technical Levels And Momentum

If AUD/USD breaks above 0.7168, the next levels are 0.7200, then 0.7250 and 0.7300. If it drops below 0.7100, support is seen at 0.7053, then 0.7000, and then 0.6956. Key drivers for the Australian Dollar include RBA interest rates, prices for iron ore, the strength of the Chinese economy, inflation, economic growth, and the Trade Balance. Iron ore was worth $118 billion a year in 2021, with China as the main destination, and the RBA targets inflation of 2–3% and may also use quantitative easing or tightening. We remember the strong bullish momentum this time last year, when speculation of Reserve Bank of Australia (RBA) rate hikes pushed the AUD/USD past 0.7100. That rally was fueled by expectations that proved to be front-loaded. Now, in March 2026, the situation has evolved significantly. The RBA has held the cash rate steady at 4.50% for the last six months, signaling a clear pause after its 2025 tightening cycle. Furthermore, critical Australian export markets are showing signs of strain, with China’s latest Caixin Manufacturing PMI for February coming in at a contractionary 49.8. This contrasts with the more optimistic outlook we saw in early 2025.

Options Strategies And Volatility Setup

This fundamental shift is reflected in key commodity prices, with iron ore falling from its late 2025 highs to trade near $110 per tonne. As a result, the AUD/USD is struggling to hold above the 0.6750 level, a stark difference from the multi-year highs it was printing twelve months ago. The bullish technical picture from last year has been completely erased. Given this stalled momentum, traders should consider selling call options with strike prices at the 0.6850 and 0.6900 resistance levels. This strategy profits if the pair remains range-bound or moves lower, capitalizing on the diminished appetite for Aussie dollar strength. It is a way to generate income from the view that a significant rally is unlikely in the coming weeks. Conversely, for those concerned about a further slide, purchasing put options below the 0.6700 support level offers a clear hedging strategy. A decisive break below this mark could be triggered by weak domestic data or further negative news from China. Such a move would target deeper levels around the 0.6600 handle. Implied volatility in AUD/USD options has compressed due to the RBA’s prolonged pause, making options relatively inexpensive. This presents an opportunity to buy straddles or strangles ahead of the next RBA meeting or major inflation data release. This would position traders to profit from a significant price move in either direction, which is a possibility if the central bank surprises the market. Create your live VT Markets account and start trading now.

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