AUD/USD Extends Rally to 0.7185 on Hawkish RBA Bets

The Australian Dollar has climbed 0.2% to near 0.7185 against the U.S. Dollar, extending a rally built on hotter-than-expected July inflation data. Headline CPI rose 3.5% year-on-year in July, down from 3.8% in June but above expectations of 3.3%, while the trimmed mean measure rose 3.6% year-on-year, unchanged from June and above forecasts of 3.5%. Traders have raised the odds of a September rate hike, while the U.S. Dollar holds recent gains ahead of Federal Reserve Chair Kevin Warsh’s Friday address at Jackson Hole.

Hot CPI Fuels RBA Hike Bets

On a monthly basis, headline CPI increased 1% in July, exceeding expectations for a 0.8% rise, while the trimmed mean rose 0.5% month-on-month, also above the forecast 0.3% gain. That monthly trimmed-mean increase marks its largest in a year, according to separate reporting on the data release. The reading complicates the Reserve Bank of Australia’s own outlook: the central bank had previously forecast trimmed mean inflation would ease to 3.3% by the end of 2026, a target that now looks harder to reach without a meaningful slowdown in the months ahead.

The RBA has held its cash rate at 4.35% for a second consecutive meeting, following three rate hikes earlier this year aimed at bringing inflation back under control, while policymakers have kept the door open to further tightening if price pressures prove stronger than expected. Following the data, traders lifted the probability of a rate hike at the RBA’s September meeting to 27% from 17% previously, while pricing an 80% chance of a hike by February 2027.

• Monthly CPI: +1.0% (forecast: +0.8%); Annual CPI: +3.5% (forecast: +3.3%)
• Trimmed mean: +3.6% y/y, unchanged from June, largest monthly rise in a year

Technical Picture Turns Bullish

AUD/USD trades at 0.7185, holding a bullish near-term bias as it advances firmly above the 20-day exponential moving average at 0.7100. That level continues to anchor underlying trend demand and gives the rally a clear structural base. The 14-day RSI sits at 69.2, just below overbought territory — a reading that confirms strong upside momentum while also signaling the advance has grown stretched after its latest leg higher.

On the U.S. side of the pair, the dollar remains supported after Thursday’s Personal Consumption Expenditures Price Index report showed inflation staying elevated, keeping the currency’s recent gains intact heading into Warsh’s Jackson Hole remarks.

Momentum Faces a Test Near 0.73

Initial support sits at the 20-day EMA near 0.7100, the level most likely to attract buyers if profit-taking sets in or momentum eases from current levels. A break below that support would weaken the near-term bullish structure meaningfully. On the upside, the pair is aiming for the four-year high at 0.7276, a level that would confirm the rally has real follow-through beyond the initial CPI-driven spike.

The next real test comes from central bank commentary rather than data alone. A hawkish tone from Warsh at Jackson Hole would extend dollar support and could slow AUD/USD’s approach to 0.7276, while any RBA signaling ahead of its September meeting that reinforces the current rate-hike odds would likely keep the Australian Dollar’s advance intact. With RSI already close to overbought, the pair’s path to a four-year high depends on whether fresh momentum arrives before the current move exhausts itself.