I've been seeing people ask lately whether the Australian dollar will continue to fall, and I've been paying attention to this question as well. To be honest, the performance of the Australian dollar over the past two years has indeed been somewhat disappointing. From 1.05 at the beginning of 2013 to now, it has depreciated by over 35% in ten years, which is relatively poor among major global currencies.

The reason for the weakening of the Australian dollar mainly results from several overlapping factors. First, Australia's economy is highly dependent on exports of bulk commodities like iron ore, coal, and copper. When the global trade environment deteriorates, the Australian dollar is hit first. Last year, as global trade tensions escalated, the AUD/USD even fell to 0.5933, hitting a five-year low. Second, the U.S. has been raising interest rates, while the Reserve Bank of Australia has taken a more cautious approach, reversing the interest rate differential and making the AUD less attractive. Additionally, China's economic growth has slowed, reducing demand for Australian raw materials, which naturally weakens the AUD.

However, recent developments show some signs of change. In the first half of this year, iron ore and gold prices rose significantly, and the Federal Reserve began signaling a pause or potential cut in interest rates, which helped the AUD rebound. I remember in September, the AUD/USD once surged to 0.6636, the highest since November last year. Although it has pulled back somewhat now, it remains above 0.64, indicating that market sentiment toward the Australian dollar has improved somewhat.

Will the Australian dollar continue to fall? That depends on three key factors. First is Australia’s own economic situation and central bank policies. The RBA’s last meeting kept interest rates unchanged and signaled caution, which provided some support for the AUD in the short term. But if economic data continues to weaken, expectations for rate cuts will rise. Second is the trend of the U.S. dollar. The Fed’s policy stance directly determines the strength of the dollar; a stronger dollar tends to suppress the AUD. Third is the recovery level of the Chinese economy. China is Australia’s largest trading partner; if China’s economy remains sluggish, Australian exports will be affected, and the AUD will likely weaken accordingly.

According to forecasts from various institutions, opinions are somewhat divided. Morgan Stanley is more optimistic, expecting the AUD to rise to around 0.72. UBS is more conservative, expecting it to stay around 0.68 by the end of the year. Some other institutions believe that the recent rebound might be only temporary, and in the long run, the dollar will regain strength.

From a technical perspective, the AUD/USD currently fluctuates within the 0.63–0.66 range. In the short term, if inflation data continues to improve and the economy stabilizes, the AUD might test above 0.66. Conversely, if U.S. economic data remains strong and the dollar rebounds, the AUD could fall back to 0.63 or even lower. In the medium term, the key factors are whether the Fed will actually cut rates and whether global trade tensions will ease.

My personal view is that the Australian dollar will experience more volatility in the short term and is unlikely to keep falling indefinitely. As long as China’s economy doesn’t worsen further and the Fed doesn’t hike rates aggressively, there’s room for a rebound. However, reaching previous highs is unlikely because the global economic environment has changed. For traders interested in AUD, it might be wise to consider building positions gradually at lows or employing range trading strategies, switching between long and short within the 0.63–0.65 range. But be sure to pay attention to risks, as the forex market is highly volatile, and setting proper stop-losses is essential.