The Australian Dollar to US Dollar (AUD/USD) exchange rate has pushed above 0.71, extending February gains as the currency continues to benefit from higher domestic yields and firm global risk appetite.
Credit Agricole says the Reserve Bank of Australia’s sharp policy turnaround has been the key driver of the Aussie’s outperformance in 2026, with the RBA the first G10 central bank to restart a tightening cycle.
That shift has coincided with markets still pricing Federal Reserve rate cuts, helping AUD/USD correct a prolonged period of undervaluation.
The bank estimates long-term fair value around 0.73-0.74 later this year and argues the recent rally reflects both improved relative rate dynamics and strong carry demand, with the AUD moving to the top of the G10 yield rankings.
However, it cautions that positioning has become elevated and that spot has run ahead of short-term fair value models based on relative rates, equities and commodity prices.
Credit Agricole has lifted its forecasts and now expects AUD/USD to reach 0.73 by mid-2026 before drifting back toward 0.70 by year-end as Fed rate cut expectations recede and the RBA approaches the end of its tightening cycle.
Disclaimer: For information only, not investment advice. This article summarises and interprets third-party research; views expressed are those of the original source and may not fully reflect the source’s complete analysis. Neither the source nor we accept liability for reliance on this interpretation.
