The Australian Dollar continues to be the best performing currency of 2026, rising by 3.70% so far. The Australian Dollar was also one of the best performing currencies of 2025 and rose against the US Dollar. In 2025, the Australian Dollar rose against the US Dollar for the first time in five years.

The Australian Dollar is primarily increasing in value for four key reasons:

• The Reserve Bank of Australia’s hawkish guidance
• Positive economic data
• Limited exposure to current geopolitical tensions, which are primarily impacting the US, EU, and UK.
• Gold, the US Dollar and AUD correlation.

AUD - Upcoming Economic Data

Australia is due to announce its latest consumer price index (inflation rate) on Wednesday morning at 00:30 GMT. Analysts expect the CPI to rise from 3.4% to 3.5% which supports the Reserve Bank of Australia’s hawkish stance. The inflation rate comes at a critical time as the RBA is due to announce its interest rate decision next Tuesday (3 February).

If the inflation rate indeed rises from 3.4% to 3.5%, the RBA is likely to continue to indicate no interest rate cuts. Currently, analysts are contemplating whether the RBA will choose to increase interest rates or stick to a pause. Many economists and markets are now assigning a significant chance (around 50%) that the RBA will raise the cash rate by 0.25% at its 3 February meeting. This follows months of inflation pressure and strong labour market data.

If, however, the inflation rate increases above 3.5%, the possibility of an interest rate hike will significantly increase. In its latest press conference, the RBA governor, Michelle Bullock, told journalists that the central bank does not expect any interest rate cuts in the ‘foreseeable future’. The Commonwealth Bank and NAB expect the RBA to increase rates by 0.25%, whereas Westpac expects a pause.

Either way a key deciding factor will be tomorrow’s Consumer Price Index. If an interest rate adjustment becomes likely, the Australian Dollar is likely to rise. At the same time, if the RBA pauses but remains extremely hawkish for the future, again the AUD may find support.

Australia’s Economic Data and Geographical Advantage

Australia also benefits from its geographical location and limited direct exposure to current global geopolitical tensions. Unlike regions such as the US, Europe, and the UK, ongoing conflicts and trade disputes involve Australia less directly. Nonetheless, the country is still a member of the G20 and has a history of stability.

As global risks remain elevated, investors are increasingly seeking currencies linked to politically stable and lower-risk regions. This has supported demand for the Australian dollar, as it offers exposure to a developed economy with strong institutions while helping investors reduce their exposure to global geopolitical uncertainty.

In addition to this, Australia’s latest economic data release comes from the employment sector. The country’s unemployment rate fell from 4.3% to 4.1%, the lowest since June 2025. Furthermore, the employment sector added a further 65,000 employed individuals, beating expectations and recording the highest growth since May 2025.

Is Gold Supporting The Australian Dollar?

It has been well documented that the Trump administration may look to slowly lower the value of the US Dollar. The US Federal Government may look to do so in order to support manufacturing. In addition to this, many institutions and countries are looking to limit their risk involved with the turbulence in the US and the US Dollar.

Even though economists do not indicate any severe decline, most believe the administration prefers a slightly weaker Dollar. As a result, other currencies such as the Euro, Australian Dollar and Swiss Franc are finding support. However, the AUD is also finding support from the rise in Gold. Australia is the second-largest producer of Gold and fifth-largest for Silver.

Australian equities and commodity sectors (including gold miners) have been boosted by the gold rally, which can improve overall market sentiment towards Australia. Currently, this is supporting the AUD, but only if the RBA continues to remain hawkish.

Technical Analysis - AUDUSD

In terms of technical analysis, AUDUSD is obtaining bullish trend signals from momentum-based indicators. However, the exchange rate is at a major resistance level at 0.69365. At the same time, the price remains at an overbought level on the RSIon the daily timeframe. As a result, investors should be cautious of retracements and limited bullish price movement.

However, trend-based indicators continue to point to a bullish trend in the medium to longer term. If the price returns above 0.69185, the bullish signals may again strengthen for short-term price action.

Key Takeaways:

• The Australian Dollar leads currency performance in 2026, rising 3.7 per cent and continuing its 2025 strength.
• Its rise is supported by hawkish RBA guidance, strong economic data, gold correlation, and geopolitical stability.
• Australia will release the CPI on 28 January, potentially influencing the RBA’s 3 February interest rate decision.
• Low exposure to global conflicts and strong employment growth make the Australian Dollar attractive to investors.
• Technical analysis shows short-term bullish momentum, but resistance near 0.69365 and overbought RSI suggest possible retracements.