AUD/USD Forecast This Week — Outlook, Drivers & Key Levels

Market Overview

AUD/USD sits at 0.7061 after slipping 0.26% — a shallow pullback rather than a decisive move. aussie dollar is range-bound and tightening, with decreasing volatility signalling a directional resolution ahead.

Market consensus rapidly shifted from bearish expecting RBA cuts to constructive bullish recognizing inflation-driven hawkish floor with 78% probability now pricing March 17 hike but positioning suggests uncertainty remains

This Week's Catalysts & Drivers

Primary driver: RBA March 17-18 meeting pricing 78% probability of second consecutive 25bp hike to 4.10% following March 3 Governor Bullock warning creates imminent binary catalyst just 2 days away

Secondary factor: China manufacturing PMI surged to 52.1 in February (5-year high) supporting commodity currency demand while elevated VIX at 27.19 signals broad risk-off creating cross-currents

Additional influence: Technical rejection at 0.7150 and breakdown below 50-day MA at 0.7095 creates near-term bearish structure conflicting with fundamental hawkish backdrop at current 0.7061 mid-range positioning

Economic backdrop: Unprecedented policy divergence as RBA tightened to 3.85% with 78% market pricing of March 17-18 hike while Fed holds at 3.50-3.75%, China PMI at 52.1 strongest in 5 years offset by VIX 27.19 elevated fear regime

Fundamental assessment: Historic policy divergence with RBA at 3.85% after March 3 hike positioning for potential second consecutive move to 4.10% while Fed holds at 3.50-3.75% creating 10-35bp gap expanding to potential 60-85bp inversion

Technical Picture

Short-term downtrend after rejecting 0.7150, trading below 50-day MA at 0.7095 but well above 200-day MA at 0.6691 in mid-range consolidation between 0.7000-0.7150

At 6/10, trend strength indicates a solid directional lean without being overextended.

Bull & Bear Case

Primary risk: RBA holds at 3.85% on March 17-18 disappointing 78% hike expectations triggering violent repricing lower from extended positioning at multi-year extremes, or VIX spike above 30 forcing risk-off carry trade unwind (Probability: medium)

Primary opportunity: RBA delivers second consecutive 25bp hike to 4.10% on March 17 validating hawkish cycle narrative driving violent breakout above 0.7150 toward 0.7250-0.7350 as market reprices multi-hike trajectory through Q2 2026 (Timeframe: 48-72 hours post March 17 2:30pm AEDT RBA announcement as hike confirmation triggers positioning chase)

This week's edge: Market appears to be under-appreciating binary volatility risk around March 17 RBA decision despite 78% hike pricing—current 0.7061 mid-range positioning and technical weakness suggest hedging/profit-taking ahead of event rather than conviction, creating asymmetric opportunity if RBA delivers expected hike triggering chase from sidelined capital versus consensus already reflecting the move

Volatility Regime

Volatility for AUDUSD is at the 54th percentile over 90 days — a normal regime that allows for standard position sizing and conventional trade management. The vol trend is down, with contraction across timeframes creating the kind of coiled conditions that historically resolve explosively.

Normalizing volatility suggests 60-80bp daily ranges through March 17 versus October-November 100-150bp; RBA decision will determine next regime with potential 100-150bp move within 24-48 hours post-announcement

What to Watch

The RBA March 17-18 Monetary Policy Decision announced 2:30pm AEDT March 17 with 78% probability of 25bp hike to 4.10% following Governor Bullock March 3 warning of live hike chance amid oil price inflation impact on Tuesday 17 March stands as the week's primary risk event — high-impact and capable of overriding the existing technical and sentiment setup.

The interplay between consolidating market conditions and upcoming catalysts will define this week's trading landscape for 6A futures.