AUDUSD – A Clash of Shifting Interest Rate DifferentialsAustralian vs US DollarPEPPERSTONE:AUDUSDPepperstoneShifting interest rate differentials between the Reserve Bank of Australia (RBA) and the Federal Reserve have kept AUDUSD bouncing around at the top of its 2026 trading range throughout May, helped in no small part by three consecutive interest rate hikes from the Australian central bank which have underpinned this popular currency on dips. Putting this in numbers, over the last 4 weeks AUDUSD has traded between a high of 0.7278 on May 6th and a low of 0.7079 seen on May 19th. It currently sits at 0.7157 (0645 BST). For FX traders, while progress updates on peace negotiations between the US-Iran are at the forefront of their minds, the impact of 3 months of conflict and elevated energy prices on inflation are also of crucial importance, as these numbers influence the next interest rate moves of central banks. Overnight, headline Australian CPI came in below expectations, which may help convince the RBA they have done enough with rate hikes for now. Tomorrow, attention could shift to the US side with the Fed’s preferred gauge of inflation, the PCE Index, due for release at 1330 BST. Any surprise deviations above or below market expectations could influence the direction of the USD side of the AUDUSD currency pair into the weekend. Technical Update: Watching for the Range Resolution: Since the March 30th session low, AUDUSD has seen upside activity, but the advance was held and reversed near long‑term resistance at 0.7283, the May 2022 high. Although the decline from this level has been relatively sharp, price weakness has found support at 0.7106, which is the 38.2% Fibonacci retracement of the March to May rally, a level traders may be monitoring when assessing price retracement behaviour. These factors have created a more balanced trading phase between the 0.7283 and 0.7106 extremes, as shown in the chart above. Such periods often reflect a decision‑making process, where buyers and sellers are evenly matched. A closing breakout from this range is usually needed to signal where the next directional move may develop. Being aware of potential key AUDUSD support and resistance levels in this type of environment can be helpful. Potential Support Levels: With recent price weakness being held by the 38.2% retracement at 0.7106, this level might now be viewed as the first support focus for AUDUSD traders. A closing break below 0.7106 could increase the risk for additional attempts to move to the downside. A close below 0.7106 could see pressure build for moves toward 0.7054, a level equal to the 50% retracement, and potentially 0.7002, which is the lower 61.8% retracement of the March to May advance. Potential Resistance Levels: We’ve highlighted 0.7283, the May 2022 high, as the possible key long‑term resistance, and it may continue to play that role. However, there is a closer resistance that may also be worth monitoring. This is the Bollinger mid‑average, which currently stands at 0.7188. This mid‑average often acts as something of a balance point within the Bollinger structure, helping identify possible shifts in momentum if a break above or below it is seen. Successful closing breaks above 0.7188 could suggest upside momentum is building again, which could open the way for a retest of the 0.7283 high. Closing breaks above 0.7283 might then be needed to indicate further upside momentum is emerging, which could shift focus toward 0.7458, the mid‑April 2022 extreme. The material provided here has not been prepared accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients. Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.