AUD Trend Forecast: A Comprehensive Analysis from Depreciation Dilemma to Rebound Opportunity

The Embarrassing Situation of the Australian Dollar: The Fate of Commodity Currencies

As the fifth-largest trading currency globally, the Australian dollar (AUD) once attracted many investors due to its high yields and liquidity. However, over the past decade, this commodity currency has been caught in a prolonged depreciation cycle.

The AUD is called a “commodity currency” because Australia’s economy heavily depends on exports of bulk commodities such as iron ore, coal, and copper. This means that the AUD’s movements are closely linked to the supply and demand dynamics of the global commodities market. When commodity prices fluctuate, the AUD often experiences sharp changes.

From early 2013 to 2023, the AUD/USD has depreciated by over 35%, while the US dollar index has risen by 28.35% in the same period. This not only reflects the relative weakness of the AUD but also exposes the sluggishness of Australia’s economic growth. In comparison, the euro, Japanese yen, and Canadian dollar have also depreciated against the US dollar, indicating a global currency re-pricing process dominated by the strength of the US dollar.

Layered Pressures: Deep Causes of the AUD Weakening

Impact of US Tariff Policies

In Q4 2024, the AUD/USD fell by 9.2% for the year. Entering 2025, changes in US trade policies further pressured the AUD. As tariffs increased, global trade growth expectations declined, with Australia—an export-oriented economy—being hit hardest. The shrinking demand for raw materials and energy exports directly weakened the commodity currency attributes of the AUD.

Diminishing Interest Rate Differentials

Once a high-yield currency, the AUD attracted global carry trades due to its relatively high benchmark interest rates. However, as the global liquidity tightening cycle progresses, this interest rate advantage is gradually eroding. The reversal of interest rate differentials between the US and Australia has led to large-scale capital outflows, significantly reducing the relative attractiveness of Australian assets.

Insufficient Domestic Economic Momentum

The Reserve Bank of Australia (RBA) faces a dilemma of inflation and growth slowdown. In 2024, Australia’s economic performance was sluggish, with GDP growth well below historical averages. This lack of economic resilience further undermines market confidence in the AUD’s long-term appreciation prospects.

In late January 2025, the AUD/USD briefly fell to 0.5933, a five-year low, fully reflecting market pessimism about Australia’s economic outlook.

Signs of Rebound: Turning Points in AUD Forecasts

Commodity Price Reversals

Although the AUD has been in a long-term downtrend, positive signals emerged in mid-2025. Since April, the AUD/USD has gradually stabilized and started to appreciate slowly. By September, iron ore and gold prices surged significantly, providing strong support for the AUD.

On September 10, the AUD/USD reached 0.6636, a new high since November 2024. This breakout indicates that under certain conditions, the AUD still has rebound potential.

Expectations of a Shift in Federal Reserve Policy

In October, the Federal Reserve announced a rate cut and signaled further easing possibilities. When the Fed enters a rate-cut cycle, the US dollar typically faces depreciation pressure, which can boost the AUD. In this scenario, capital begins to flow back into higher-yield assets, restoring the attractiveness of the AUD.

Three Key Variables in AUD Forecasts

First Variable: RBA’s Policy Stance

In November 2025, the RBA maintained interest rates at 3.6% and issued a cautious signal. Although inflation is gradually declining and approaching the RBA’s target range, the central bank emphasized that further rate cuts would only be considered once inflation enters a sustainable downward trajectory.

This cautious stance provides short-term support for the AUD. If the RBA maintains a relatively hawkish position amid global easing by other central banks, the AUD will be more attractive compared to other currencies.

Second Variable: Strength of the US Dollar

Since rebounding from a low near 96 in the summer, the US dollar index (DXY) has shown unexpected resilience, rising about 3%. If the dollar continues to strengthen and breaks through the 100 psychological level, the upside for the AUD will be severely limited. Conversely, if the Fed’s rate cuts exceed expectations, the dollar may face greater downward pressure, providing an opportunity for the AUD to rise.

Third Variable: China’s Economic Recovery

Australia’s economy is highly dependent on the Chinese market, which is its largest buyer of key raw materials like iron ore, coal, and natural gas. The health of China’s economy directly influences demand and prices for these commodities.

When China’s economy shows strong growth, raw material exports and prices tend to rise, providing clear support for the AUD. However, if China’s real estate market remains sluggish, leading to slower economic growth, the AUD will lose an important demand foundation.

Divergent Forecasts from Major Institutions

Regarding the AUD’s outlook at the end of 2025, financial institutions hold markedly different views. Morgan Stanley is relatively optimistic, expecting the AUD/USD to reach 0.72 by year-end, based on the RBA maintaining a hawkish stance and commodity prices supporting the currency.

UBS is more conservative, believing that despite Australia’s resilience, ongoing global trade uncertainties and potential Fed policy shifts will limit the AUD’s gains, with a forecast near 0.68.

The economists at the Commonwealth Bank of Australia offer a more challenging view: they predict the AUD’s recovery may be only temporary. They expect the AUD/USD to peak around March 2026 but to fall back again by year-end, reasoning that the US economy will ultimately outpace other major economies, strengthening the dollar anew.

Forecasts for Major Currency Pairs: Outlook and Strategies

AUD/USD Technical and Fundamental Analysis

Currently, AUD/USD fluctuates around 0.65. Key resistance is at 0.6450; a sustained move above this level could open the way toward 0.6500 psychological resistance. Support is around 0.6370.

In the short term, inflation data and economic growth figures will be dominant factors. If Australia’s CPI continues to decline and economic data remain stable, the AUD may test higher resistance levels. Conversely, strong US data boosting the dollar or weak Australian data could push the AUD back toward 0.63.

AUD/CNY Cross-Border Trade Impact

AUD/CNY’s movement closely follows AUD/USD, but due to relatively moderate RMB fluctuations, the decline is usually slightly smaller. Short-term, expect oscillations between 4.6 and 4.75.

If China’s economy weakens due to domestic pressures, AUD/CNY could briefly rise toward 4.8. This reflects the stability of Sino-Australian trade relations and the relative independence of RMB policy.

AUD/MYR Regional Economic Differences

AUD/MYR’s fluctuations are influenced by the relative strength of the two economies. In the uncertain global environment, expected volatility ranges between 3.0 and 3.15.

If Australia’s economic data remain weak, the AUD may test support near 3.0. The relative stability of the Malaysian ringgit stems from Malaysia’s stable monetary policy and diversified exports.

Investment Strategies Based on AUD Forecasts

Short-term Trading: Range Trading and Breakout Follow-ups

Within the current range of 0.6370–0.6450, traders can adopt range trading strategies. When prices approach the support at 0.6370, consider small long positions targeting resistance. If resistance at 0.6450 is broken, add to positions with the next target at 0.6500.

Conversely, if support is broken, consider short positions with targets at 0.6336 or even 0.6300. It is crucial to reduce positions ahead of key data releases like US GDP, non-farm payrolls, and Australian CPI to manage potential volatility.

Mid-term Strategy: Trend Following and Policy-Driven

Over the 1-3 week horizon, the key to AUD movement depends on central bank policies and the US dollar trend. If Fed rate cut expectations rise and trade tensions ease, the AUD could break above 0.6550–0.6600. A technical breakout above the 200-day moving average (0.6464) would signal a reversal.

If US economic data remain strong, delaying Fed rate cuts, the dollar may regain strength, pushing the AUD toward 0.6250. Be alert to rising Australian inflation or geopolitical events triggering safe-haven flows.

Long-term Positioning: Gradual Accumulation and Patience

For investors optimistic about the AUD’s long-term prospects, current lows are good entry points for phased accumulation. Using time to smooth out market volatility and waiting for confirmed bullish signals can effectively reduce risk and position for a sustained rebound.

Core Conclusions on AUD Forecasts

The AUD is currently at a crossroads of technical oscillation and fundamental battles. Historically, the AUD is seeking a breakout from long-term depreciation pressures. The rebound in commodity prices, expectations of Fed rate cuts, and the RBA’s relatively hawkish stance all jointly create potential for a rebound.

However, the sustainability of these positive factors remains uncertain. US economic resilience, global trade conditions, and China’s recovery will continue to influence the outlook. Investors should closely monitor key economic data and central bank signals, adjust positions flexibly, and aim to capture rebound opportunities while managing risks.

Foreign exchange involves risks; any investment decision should be preceded by thorough risk assessment.