AUD's Range Fluctuation Under Multiple Pressures: Trend Forecast and Trading Strategy Analysis

The Australian dollar is the fifth-largest traded currency globally, and the AUD/USD currency pair ranks among the top in the foreign exchange market, characterized by ample liquidity and reasonable spreads, making it convenient for investors to execute short-term strategies or medium-term positioning.

The core of AUD movement prediction lies in understanding its commodity currency attributes: Australia’s economy heavily depends on exports of bulk commodities such as iron ore, coal, and copper. Any fluctuations in global raw material prices can directly trigger significant adjustments in the AUD exchange rate. At the same time, as a high-yield currency, the AUD has long attracted arbitrage traders’ attention. However, its performance over the past decade has not been ideal—except during the COVID-19 pandemic in 2020, when demand for iron ore in Asia surged and Australia effectively controlled the pandemic, pushing the AUD up by 38%. For most of the time, the AUD remained subdued.

Entering the second half of 2025, with rising iron ore and gold prices, and the Federal Reserve initiating a rate-cut cycle that boosts the appeal of risk assets, the AUD has also rebounded. In September, the AUD/USD briefly reached 0.6636, a new high since November 2024. But can this rebound continue? The key depends on the interplay of multiple variables.

Over 35% depreciation in ten years: Why has the AUD fallen into relative weakness?

As an important commodity currency, the AUD was once highly favored, but its trend has been persistently weak over the past decade. The attractiveness of high interest rates has diminished, and demand for commodities has also declined.

From the early 2013 level of 1.05, the AUD/USD has depreciated by over 35% in ten years, while the US dollar index has risen by 28.35% in the same period. Other major currencies like the euro, yen, and Canadian dollar have also depreciated against the dollar, reflecting a broad strong dollar cycle. From both technical and fundamental perspectives, the AUD is in a passive position, which explains why even rebounds have struggled to break through high levels.

In Q4 2024, the AUD/USD plummeted sharply, with a full-year decline of about 9.2%. As 2025 began, global trade tensions intensified and recession fears grew, pushing the AUD down to 0.5933, a five-year low. Analysts point out that the fundamental reasons include: US tariffs suppress global trade; declines in raw material exports (metals, energy) weaken the commodity currency support; the difficulty in reversing the Australian interest rate differential; and sluggish domestic economic conditions reducing asset attractiveness, leading to capital outflows.

AUD movement forecast: three key factors determine the direction

Factor 1: Australia’s economy and central bank policy stance

In Q3 2025, Australia’s Consumer Price Index (CPI) rose by 1.3% month-on-month, higher than the previous 0.7% and exceeding market expectations. The Reserve Bank of Australia (RBA) emphasized that core inflation pressures in housing and services remain stubborn, clearly stating that it will not ease policy until inflation enters a sustainable downward trajectory.

Because inflation is significantly above the RBA’s forecast range, market expectations for a rate cut in November have fallen sharply. This cooling of expectations in the short term provides support for the AUD, making it more attractive compared to currencies that are about to cut or expand easing.

Factor 2: Changes in the strength of the US dollar

In October, the Federal Reserve cut the federal funds rate by 25 basis points to 3.75%-4.00%, marking the second rate cut of the year and ending balance sheet reduction since December. However, cautious signals from Powell have dampened market enthusiasm for further rate cuts this year. Despite ongoing discussions about de-dollarization, the US dollar index has rebounded about 3% from its summer low near 96, with the possibility of breaking the psychological threshold of 100 increasing. Generally, when the dollar strengthens, the AUD weakens, showing an inverse relationship.

Factor 3: The strength of China’s economic recovery

Australia’s economic structure is highly dependent on resource exports, with China being its largest buyer. China’s economic performance directly influences demand for key raw materials like iron ore, coal, and natural gas, serving as a critical support for the AUD. Strong Chinese demand boosts Australian exports and commodity prices, enhancing market confidence in AUD assets; conversely, concerns about long-term demand can weaken the AUD.

Diverging institutional views: different forecasts for AUD

Mainstream financial institutions have differing views on the AUD’s future direction. Morgan Stanley is bullish, expecting the AUD/USD to rise to 0.72 by year-end, based on the possibility of the RBA maintaining a hawkish stance and commodity prices supporting the currency.

UBS is more cautious, believing that despite Australia’s economic resilience, global trade uncertainties and changes in Fed policy could limit the AUD’s gains, with a forecast around 0.68 by year-end.

Australian central bank economists are more conservative, predicting that the AUD’s rebound may be short-lived, expecting AUD/USD to peak around March 2026, but possibly decline again by year-end. They believe that as the US economy outperforms other major economies, the dollar could regain strength in late 2025.

AUD movement forecast: layered analysis of multiple currency pairs

AUD/USD technical and fundamental contest

In November, the RBA maintained interest rates at 3.6% and issued cautious signals, emphasizing that inflation remains above expectations. Currently, AUD/USD oscillates around 0.65.

From a policy perspective, the RBA’s decision not to cut rates indicates caution regarding inflation, providing short-term support for the AUD. However, the outlook for Fed policy remains a key driver of USD movements. Inflation in Australia has eased and approached the target range, laying a foundation for future easing, but slowing GDP growth and rising global uncertainties add economic pressure. Trade-wise, US tariffs and geopolitical tensions remain high, and as a commodity currency, the AUD’s trend closely correlates with commodity prices.

In the short term, AUD/USD is expected to fluctuate between 0.63 and 0.66. If inflation data is favorable and the economy remains stable, it may test resistance above 0.66; if global risk appetite deteriorates or the dollar appreciates, the AUD could fall back to 0.63 or lower.

AUD/CNY regional trade logic

Trade stability between Australia and China positively influences this currency pair. The RMB exchange rate is heavily influenced by Chinese central bank policies and US-China relations. Recent RMB movements will significantly impact AUD/CNY. Despite soft Chinese economic data, the US reducing some tariffs may ease depreciation pressures. Given RMB’s relative stability, AUD/CNY may decline slightly less than AUD/USD.

In the short term, AUD/CNY is expected to fluctuate between 4.6 and 4.75. If the RMB weakens due to domestic economic pressures or external shocks, AUD/CNY could temporarily rise toward 4.8.

AUD/MYR regional economic divergence

Malaysia’s economy relies on exports and raw materials; the ringgit is sensitive to commodity prices. Weak Australian economic data may limit AUD’s rebound potential. If Malaysia’s central bank adopts a relatively tight policy, the ringgit could strengthen; easing by the RBA would reduce AUD depreciation pressure.

Forecast for AUD/MYR is between 3.0 and 3.15, with potential testing of support near 3.0 if Australian economic data further deteriorates.

Investment strategies for AUD: short-, medium-, and long-term trading frameworks

Short-term trading (1-3 days): mainly range breakout

Long positions: If AUD/USD breaks above 0.6450 resistance, consider small long positions targeting the 200-day moving average at 0.6464, and further toward the psychological level of 0.6500. Entry triggers include US GDP or non-farm payrolls weaker than expected (implying higher chance of rate cuts) or Australian CPI unexpectedly rising. Stop-loss at below 0.6420.

Short positions: If it falls below support at 0.6373 (10-day EMA), consider shorting toward 0.6336 recent lows or even 0.6300. Entry triggers include strong US data or a significant cooling of Australian CPI. Stop-loss above 0.6400.

Before data releases, maintain caution; reduce positions or exit ahead of US GDP, core PCE, and Australian CPI announcements.

Medium-term strategy (1-3 weeks): trend-following and policy linkage

Bullish scenario: If US employment data softens, inflation declines, and trade tensions ease, risk sentiment may improve, pushing AUD higher toward 0.6550-0.6600. Confirmed break above the 200-day moving average can be a signal to add positions. Risks include a resurgence of Australian inflation prompting hawkish shifts, unexpected US dollar weakness, or geopolitical events triggering safe-haven flows.

Bearish scenario: If US economic data exceeds expectations (GDP, non-farm payrolls), and the Fed delays rate cuts, the dollar could regain strength, and AUD may test lows near 0.6250 within the year. Catalysts include weaker-than-expected Australian trade data, further rate cut expectations, or soft Chinese economic data.

Long-term holding: phased deployment and time smoothing

Long-term investors optimistic about AUD can build positions gradually at lows, smoothing out market volatility, especially after confirming an uptrend.

Investment conclusion and risk warning

Currently, AUD’s outlook features technical oscillations and fundamental battles. Short-term trading should focus on range (0.6370-0.6450), with breakout follow-up. The medium- to long-term trend depends on Fed policy signals and whether global trade risks ease. If this week’s data reinforce rate cut expectations, consider long positions; otherwise, beware of USD rebound pressures.

Traders should closely monitor market sentiment before and after data releases and adjust strategies flexibly. All investments carry risks; forex trading is high-risk, and investors should understand the possibility of principal loss.