Last Updated on January 28, 2026 by Deon
AUD got the moves The Australian dollar is now sitting tight in a high-stakes game. It’s Wednesday, January 28, 2026, and the “Aussie” is trading sideways just below what was supposed to be near-around the 0.7000 level; a multi-year high we haven’t spent time at since early last year.The market feels like it’s in a holding pattern but what we are seeing is more of a battle between a careful U.S. Federal Reserve and an unexpectedly “hawkish” Reserve Bank of Australia (RBA) in Sydney.
The Fed’s “Wait and See” Mode
The Federal reserve is in the limelight today at 19:00 GMT with an interest rate decision. The Fed, which last year cut rates several times, is widely expected to leave interest rates unchanged between 3.50% and 3.75%.
The U.S. economy has proved remarkably resilient of late, leaving Chair Jerome Powell with the luxury of patience. But if he suggests the Fed is done cutting for the time being, then we might see a little flexing of King Dollar’s muscles at play, which could push the Aussie back down.
Australia’s “Hot” Inflation Problem
As the U.S. cools down, matters are heating up in Australia. New data released on Wednesday indicates that inflation is proving stickier than anyone anticipated:
Headline CPI: Rose to 3.8 percent (from 3.4 percent in November).
The “electricity?shock”: Power bills were up over 21 per cent, after state government rebates in Queensland and WA ended.
Meat & Veggies: Beef and lamb prices jumped more than 10pc amid strong international demand, while summer weather saw fruit and vegie supplies wilting.
This “hot” data has all but convinced the market that ABS will be forced to jncrease interest rates when it meets next Tuesday (February 3). This anticipation is creating a solid “floor” under the AUD, not allowing it to lose much ground even as the U.S. Dollar recovers.
Key Levels to Watch
A near 3 year high,2 years at least. US Dollar Index96. 25Off a 4-year low of 95.56.
What’s Next?
If Jerome Powell shows the slightest concern over inflation today, the USD could rally and force the Aussie back under 0.7000. On the other hand if he maintains his line on cuts to come, aussie could pay a visit to 0.7200 ahead of next week’s RBA meeting.
