The Truth Behind the Australian Dollar's Continued Pressure: Trend Forecast and Strategy Recommendations

The Australian dollar, as the fifth-largest global trading currency, boasts ample liquidity and low spreads, but has shown a continuous weakening trend over the past decade. What exactly has caused this once-hot commodity currency to fade into obscurity? Is there a rebound opportunity in the future?

Why Has the AUD Become a “Lame Duck”? The True Reasons Behind Over 35% Depreciation in Ten Years

The Australian dollar’s predicament stems from multiple overlapping factors. Starting from a high of 1.05 in early 2013, the AUD/USD has depreciated by over 35% in the past ten years, while the US dollar index (DXY) has risen by 28.35% during the same period. This is not just an Australian issue; major currencies like the euro, yen, and Canadian dollar have also depreciated significantly against the dollar, reflecting a global strong dollar cycle.

The core reason for the AUD’s underperformance is its status as a commodity currency. Australia’s economy is highly dependent on exports of iron ore, coal, copper, and other raw materials. When global commodity prices retreat, the AUD often experiences sharp fluctuations.

Entering the fourth quarter of 2024, the AUD/USD’s downward momentum intensified, with a full-year decline of about 9.2%. By early 2025, amid escalating global trade tensions, the AUD even touched a five-year low of 0.5933. Major reasons include: US tariff policies impacting global trade patterns, leading to bleak prospects for Australian commodity exports; a significant decline in the interest rate differential between Australia and the US; and domestic economic growth remaining sluggish, with continued capital outflows.

Can the AUD “Rebound”? Three Key Factors Determine the Outlook

By mid-2025, the AUD experienced a rebound driven by soaring iron ore and gold prices, and expectations of Fed rate cuts. On September 10, the AUD/USD briefly surged to 0.6636, hitting a high since November 2024. But can this rally continue? Attention must be paid to three core variables.

(1) Domestic Inflation and Central Bank Stance in Australia

In Q3 2025, Australia’s CPI rose by 1.3% month-on-month, far exceeding market expectations and the previous quarter’s 0.7%. The Reserve Bank of Australia (RBA) has repeatedly emphasized that core inflation pressures in housing construction and services remain stubborn. Until inflation clearly enters a sustainable downward trajectory, the likelihood of rate cuts by the RBA is greatly diminished.

This policy stance, paradoxically, provides short-term support for the AUD—when markets expect the RBA to maintain a relatively hawkish stance, the AUD becomes more attractive compared to currencies expected to cut rates.

(2) The “Weather Vane” Role of US Dollar Strength

At the end of October, the Fed announced a 25 basis point rate cut, but Chairman Powell’s subsequent comments cooled market expectations for further easing. Despite discussions about dollar depreciation and de-dollarization, the dollar index (DXY) rebounded from its summer low of 96 to over 3% gains, with the psychological 100 level increasingly within reach.

Generally, when the dollar strengthens, the AUD tends to weaken inversely, showing a clear negative correlation.

(3) China’s Economic Recovery as a “Barometer”

China is Australia’s largest buyer of resources. The trajectory of China’s economy directly influences demand for Australian iron ore, coal, natural gas, and other raw materials, acting as a ballast for the AUD.

Currently, China’s economic growth slowdown and ongoing real estate market slump have raised concerns that long-term demand for Australian commodities may further decline, exerting downward pressure on the AUD.

How Do Financial Institutions View the AUD Outlook? Diverging Opinions

Morgan Stanley remains relatively optimistic, expecting the AUD/USD to rise to 0.72 by the end of 2025, citing the RBA’s potential hawkish stance and support for commodity prices.

UBS is more cautious, believing that uncertainties in global trade and possible shifts in Fed policy will limit the AUD’s upside, projecting a year-end rate around 0.68.

CBA economists have recently expressed the most pessimistic view, suggesting that the AUD’s recovery may be short-lived. They forecast that after peaking around March 2026, the AUD/USD could decline again by year-end, as the US economy’s faster growth compared to other major economies would strengthen the dollar anew.

Analysis of Major Currency Pairs: AUD/USD, AUD/CNY, and Others

Short-term Outlook for AUD/USD

The RBA kept interest rates unchanged in November and issued cautious signals. Currently, the AUD hovers around 0.65. Key resistance is at 0.6450; a break above could test the 0.6500 level. Support is at 0.6373; a breakdown might lead to testing 0.6300.

AUD/CNY Trend Analysis

The AUD/CNY chart shows a strong correlation with AUD/USD. The stability of Sino-Australian trade and RMB policy expectations are primary influences. Given the relatively small fluctuations in the RMB, the forecast for the next 1-3 months is for the pair to oscillate between 4.6 and 4.75. If the RMB weakens due to economic pressures, it could short-term spike toward 4.8.

AUD/MYR Outlook

The Malaysian ringgit is also sensitive to commodities, with Bank Negara Malaysia’s policies remaining relatively stable. If Australian economic data continue to weaken, the AUD/MYR may fluctuate between 3.0 and 3.15, possibly testing the 3.0 support level downward.

Stage-by-Stage Investment Strategies: From Trading to Positioning

Short-term (1-3 days)

Long opportunities may arise if the AUD breaks above 0.6450 resistance, US economic data underperform, or Australian CPI exceeds expectations, targeting 0.6500. Short opportunities could be triggered if the pair falls below 0.6373 amid strong US data, with a target of 0.6300. It is advisable to reduce positions before major data releases.

Medium-term (1-3 weeks)

Bullish scenarios depend on rising expectations of Fed rate cuts and easing trade tensions, with targets around 0.6550-0.6600. Bearish scenarios stem from resilient US economic data, dollar strength, and China’s economic weakness, with targets near 0.6250.

Long-term Positioning

Investors optimistic about the AUD long-term can accumulate in phases at current lows, leveraging time to smooth out market volatility, especially after confirming an intermediate upward trend.

Overall Judgment

The AUD/USD is currently in a phase of technical and fundamental tug-of-war. Short-term trading should focus on the 0.6370-0.6450 range, with breakout follow-up. The medium- to long-term direction depends on Fed policy signals and whether global trade risks ease. If economic data this week reinforce expectations of rate cuts, consider building long positions; otherwise, remain cautious of a dollar rebound.

Investors should closely monitor the AUD/CNY chart and other market data, adjusting strategies flexibly around economic releases, maintaining a dynamic risk management approach. All forex trading involves risks, and investors may lose all capital—exercise caution.