Recently, there is a phenomenon worth paying attention to: the Australian dollar has seemed to weaken continuously for over a decade, and many people share this feeling. I looked into the data and found that the AUD/USD exchange rate, which approached a high of nearly 1.05 in early 2013, has depreciated by over 35% since then. During the same period, the US dollar index rose by 28.35%, and the euro, yen, and Canadian dollar also depreciated against the US dollar, so this is actually a comprehensive strong dollar cycle. In other words, the weakness of the AUD is often not an issue with the currency itself, but because the US dollar is too strong.

Looking back at the AUD's trend over the past ten-plus years, several clear phases can be identified. From 2009 to 2011, China experienced a strong recovery, commodity prices surged, and Australian interest rates were significantly higher than those in the US, pushing the AUD close to 1.05. Later, from 2020 to 2022, a global commodities bull market, record-high iron ore prices, and rapid rate hikes in various countries caused the AUD to briefly break below 0.80. But from 2023 to 2024, China's sluggish recovery led to volatility at high levels, the interest rate differential began to narrow, and the AUD remained relatively weak over the long term. Entering 2025, with expectations of rate cuts warming and commodities rebounding, the AUD's future trend started to show some signs of rebound.

After 2024, I noticed a shift. As prices of commodities like iron ore and gold rebounded, combined with market expectations of the Federal Reserve cutting rates and the US dollar index retreating from high levels, the AUD began to show a clear rebound from lows. By 2025, it mostly maintained a relatively high range seen in recent years. However, whenever the AUD approached previous high zones, selling pressure increased significantly, indicating that market confidence in the AUD remains limited.

Why is this happening? I analyzed a few main reasons. First, the interest rate differential advantage is less obvious than before. The Reserve Bank of Australia's cash rate is around 4%, and recent quarters have maintained a hawkish stance, but compared to the period from 2009 to 2011 when rates were significantly higher than the US dollar, the attractiveness has become more moderate. Second, the drag from the strong dollar cycle persists; the US dollar index remains structurally strong, with most major currencies depreciating against the dollar. Lastly, Australia's dependence on China introduces more volatility; Australia's export structure is highly concentrated in iron ore, coal, and energy, with China long being the largest buyer. In recent years, China's data has been weaker than expected, raw material exports have declined, which has also impacted the commodity currency status of the AUD.

From a medium- to long-term perspective, the AUD's trend is not determined by a single factor. I believe three key factors mainly influence its future. The first is the RBA's interest rate policy—whether the interest rate differential can regain its advantage. The long-term attractiveness of the AUD heavily depends on the interest rate structure; as long as the RBA remains more hawkish than expected and maintains higher rates compared to other major central banks, the AUD could rebuild some of its interest rate advantage. The second is China's economy and commodity prices—this is the external engine for the AUD. If China's subsequent stimulus policies are effective, boosting domestic demand and infrastructure, and iron ore and other prices rise, this will generally provide substantial support for the AUD. The third is the US dollar trend and global risk sentiment—this determines capital flows. When markets enter risk-on phases and the US dollar index retreats, capital tends to favor commodity currencies, but if global economic concerns rise and geopolitical risks increase, capital flows back into the dollar, putting pressure on the AUD even if its fundamentals haven't worsened significantly.

For the AUD to break out into a genuine medium- to long-term bull market, three conditions must be met simultaneously: the RBA remains relatively hawkish, the interest rate differential becomes a highlight again, China's demand substantially improves, and the US dollar enters a structural weakening phase. If only one of these is present, the AUD is more likely to stay in a range rather than trend upward unilaterally.

Regarding future AUD trends, most market analysts agree that there is room for short-term recovery, but returning to a strong bull phase requires clearer macroeconomic conditions. Morgan Stanley is optimistic about the AUD's fundamentals, with a target price of up to 0.725. Goldman Sachs has raised its forecast range for the next 3 to 12 months to 0.72–0.74. Deutsche Bank forecasts 0.76 by the end of 2026, citing resilience in global economic growth, strong commodity demand, and widening interest rate spreads supporting the AUD. UBS predicts 0.70–0.72 by 2026, expecting the RBA to possibly hike twice more, but economic slowdown will limit the upside. The Commonwealth Bank of Australia forecasts 0.70 by 2026, noting that the interest rate differential poses significant downside risks, and the AUD may struggle to sustain high levels.

From my personal observation, the short-term pressure on the AUD mainly comes from RBA and Fed policies, with interest rate spreads being the key driver. The long-term bullish outlook depends on Australia's resource exports and commodity cycles. Rather than trying to precisely predict the AUD's future, a more practical approach is to treat the AUD/USD as a commodity currency oscillating within a range, focusing on entry and exit points at the boundaries and risk management. Many traders operate this way, using technical indicators like the 200-day moving average, RSI, and MACD for range trading.

In summary, as a commodity-exporting country, the AUD's characteristic as a commodity currency remains evident, especially with high correlation to prices of copper, iron ore, coal, and other raw materials. In the short term, the RBA's hawkish stance and strong raw material prices will provide support, but in the medium to long term, global economic uncertainties and potential US dollar rebounds will limit upside and may lead to more volatile movements. Forex market fluctuations are rapid, and exchange rate trends are inherently difficult to predict accurately, but due to its high liquidity, strong volatility patterns, and economic structure, medium- to long-term trend judgments are relatively easier to grasp.