The Australian dollar really hasn't recovered in the past decade. Just look at the data: from 1.05 at the beginning of 2013 to now, it has depreciated by over 35%, while the US dollar index has risen by more than 28%. This is not just an Australian dollar issue; the euro and yen have also weakened, but the Australian dollar's performance is particularly weak.

Recently, I’ve noticed a phenomenon: every time the Australian dollar rebounds near previous highs, selling pressure clearly increases. This indicates that market confidence in the Australian dollar is truly limited. The main reason is quite clear—U.S. tariff policies are hurting global trade, and demand for Australia’s iron ore and energy exports is declining. The advantage of the Australian dollar as a commodity currency is weakening. Plus, the interest rate differential between Australia and the U.S. is narrowing, and Australia’s domestic economic performance is below expectations, making its assets less attractive.

For the Australian dollar to truly strengthen, three conditions must be met simultaneously: the Reserve Bank of Australia maintaining a hawkish stance, a substantial improvement in Chinese demand, and the U.S. dollar entering a structural weakening phase. Currently, it seems unlikely that all three will happen at the same time. Morgan Stanley forecasts the Australian dollar could rise to 0.72, while UBS is more conservative, expecting it to stay around 0.68. My personal observation is that in the first half of 2026, the Australian dollar is more likely to fluctuate between 0.68 and 0.70, heavily influenced in the short term by Chinese data, and in the long term by Australia’s resource exports and commodity cycles.

Although the Australian dollar is among the top five most traded currencies globally, with high liquidity and low spreads, it has become difficult to see a sustained upward trend in recent years. Even when it rebounds, it’s more like a short-term correction rather than a trend reversal. For those interested in trading the Australian dollar, forex margin trading can be considered, supporting both long and short positions, but it also involves significant risks, so be mentally prepared.