Published: 16 March 2026,08:23
Daily Market Analysis New
*The Australian Dollar trades near 0.7000 against the U.S. Dollar ahead of the policy decision from the Reserve Bank of Australia.
*Futures indicate about a 70% chance of a 25 bps hike to 4.10% as inflation remains above target and energy prices surge.
*Disruptions around the Strait of Hormuz are lifting oil prices, reinforcing the case for tighter policy and supporting AUD.
Market Summary:
The Australian dollar is trading near the 0.7000 level against its U.S. counterpart, showing modest resilience in recent sessions amid elevated commodity prices and growing speculation that the Reserve Bank of Australia will resume its tightening cycle at tomorrow’s policy meeting . The pair has remained largely range-bound near the psychological level following February’s volatility, though the upcoming decision presents a clear directional catalyst.
The Monetary Policy Board concludes its two-day meeting tomorrow, with the cash rate announcement scheduled for 2:30 pm AEDT. Market pricing points to a 70-71 percent probability of a 25 basis point hike to 4.10 percent, according to ASX 30-day futures . A Reuters poll conducted March 10-12 shows 23 of 30 economists expect a March hike, a notable shift from February’s survey that anticipated rates would remain at 3.85 percent through the year . Several major banks now forecast consecutive tightening extending into May, with the median outlook seeing the cash rate reaching 4.35 percent by end-2026 .
Inflation remains the central concern, with headline CPI at 3.8 percent—well above the 2-3 percent target band—and the Middle East conflict adding fresh upside pressure through surging oil prices near $98-$100 per barrel . A private gauge of consumer inflation expectations rose to 5.2 percent in March, the highest level since July 2023. Resilient domestic demand, a tight labor market with unemployment at 4.1 percent, and strong commodity export revenues reinforce the hawkish tilt. The Strait of Hormuz disruptions add imported inflation risk that likely outweighs any near-term growth concerns.
A 25 basis point hike would likely support AUD strength toward the 0.71-0.72 region on improved yield differentials, while a surprise hold could pressure the pair back toward 0.69. The accompanying statement and Governor Bullock’s press conference will be closely scrutinized for signals on the May meeting and the RBA’s assessment of the conflict’s inflationary impact. Volatility is elevated heading into the release.
Technical Analysis
The AUDJPY pair maintains its long-term uptrend trajectory, consistently supported by the ascending trendline established in October 2025. This bullish structure has guided price action through multiple months of gains, with the pair recently testing multi-year highs.
The current price action reflects a technical correction phase, with the pair now approaching a critical support confluence near the 111.40 level. Multiple technical analyses identify this zone as a significant technical threshold. The 111.40 level aligns with major support levels cited by analysts, with a sustained break below this area potentially triggering a deeper sell-off . Conversely, this zone represents a logical area for buyers to re-enter, consistent with the pattern of healthy corrections within an established uptrend.
Momentum indicators present a cautiously constructive picture, with recent overbought conditions easing during the current pullback, potentially setting the stage for renewed buying interest should support hold. The pair’s behavior at this critical juncture will determine whether the current correction represents a healthy pause within the uptrend or the beginning of a more significant reversal.
Resistance Levels: 113.50, 115.55
Support Levels: 108.70, 106.40
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