Recently analyzing the Australian dollar trend, I discovered an interesting phenomenon: as the fifth most traded currency globally, the AUD is highly liquid with tight spreads, and should be a trader's favorite. However, its performance over the past decade has been less than ideal. I’ve compiled some data on AUD forecasts and want to share some observations.

Starting from early 2013, the AUD/USD has depreciated over 35% in these ten years, while the US dollar index has risen by 28% during the same period. This isn’t just an AUD issue; the euro, yen, and Canadian dollar have also depreciated against the dollar, indicating a global strong dollar cycle. The AUD was once considered a high-yield currency, attracting arbitrage trades, but now the interest rate advantage has long disappeared.

Why is the AUD so weak? The core reason is quite clear: US tariffs have hit global trade, and exports of metals, energy, and other raw materials from Australia have declined, directly weakening the AUD’s support as a commodity currency. Plus, the interest rate differential between Australia and the US is hard to reverse, and Australia’s domestic economy isn’t strong enough, making the currency’s attractiveness limited. Every time the AUD approaches previous highs, selling pressure increases noticeably, and market confidence in the AUD remains limited.

However, there was a small rebound in 2025, with iron ore and gold prices surging, and the Fed cutting interest rates also driving funds into risk assets. The AUD/USD once rose to 0.6636, appreciating about 5-7% for the year. But in the long term, the AUD trend remains weak, and the rebound is more of a short-term correction rather than a trend reversal.

To forecast the AUD’s future trend, I believe three key factors are worth paying attention to. First is the Reserve Bank of Australia’s monetary policy. Currently, the cash rate is about 3.60%, and the market expects another rate hike in 2026. If the RBA maintains a hawkish stance, it will help rebuild the AUD’s interest rate advantage; if rate hike expectations fall short, the AUD’s support will weaken significantly. Second is China’s economy and commodity prices. Australia’s exports are highly concentrated in iron ore, coal, and energy, so changes in Chinese demand directly impact the AUD. When China’s infrastructure activity picks up, iron ore tends to strengthen simultaneously, and the AUD reflects this quickly; but if China’s recovery lacks momentum, even short-term rebounds in commodities may be followed by declines in the AUD. The third factor is the US dollar trend and global risk sentiment. The Fed’s policy cycle remains central to the global forex market. A dovish environment usually weakens the dollar and benefits the AUD, but if risk aversion rises and funds flow back into the dollar, the AUD may face pressure even if fundamentals are stable.

Regarding the outlook for AUD forecasts, market opinions are divided. Morgan Stanley expects the AUD/USD to rise to around 0.72 by the end of the year, mainly based on the RBA’s hawkish stance and rising commodity prices. Traders Union’s statistical model shows an average of about 0.6875 by the end of 2026, emphasizing Australia’s strong labor market and commodity demand recovery. But UBS remains more cautious, believing that global trade uncertainties could limit the AUD’s gains, projecting the year-end rate around 0.68. CBA economists are even more conservative, suggesting the AUD’s rebound may be short-lived, expecting it to peak around March and then decline again.

From my personal observation, the AUD is likely to fluctuate between 0.68 and 0.70 in the short term, influenced by Chinese data and US employment figures. The AUD won’t crash because Australia’s fundamentals are solid and the RBA remains relatively hawkish, but it also won’t surge above 0.72 easily, as the structural advantage of the dollar persists. Short-term pressure mainly comes from Chinese data, while long-term positives include resource exports and commodity cycles.

For the AUD to break out into a true medium- to long-term bull trend, three conditions must be met simultaneously: the RBA returning to a hawkish stance, a substantial improvement in Chinese demand, and a structural weakening of the dollar. Currently, it seems more likely that the AUD will stay in a range rather than trend upward unilaterally. The difficulty in AUD forecasting lies in the fact that these three conditions are hard to satisfy at the same time.

For those interested in trading AUD, AUD/USD is indeed a good choice—high liquidity, regular volatility, suitable for short-term trading as well as medium- and long-term positioning. Forex margin trading offers opportunities for both long and short positions, with flexible leverage options. But remember, all investments carry risks; forex trading is high risk and requires proper risk management.