Recently, many people have been asking whether the Australian dollar will continue to fall, and this is indeed a question worth discussing thoroughly. As the fifth-largest trading currency in the world, the AUD has good trading activity and liquidity, but its performance in recent years has been somewhat disappointing.

You might not know that the AUD is actually a typical commodity currency because the Australian economy heavily relies on exports of iron ore, coal, copper, and other bulk commodities. Therefore, as long as global raw material prices fluctuate, the AUD exchange rate tends to experience sharp changes. This is also why many investors treat the AUD as a high-yield currency for carry trade strategies.

But the reality is that the AUD has performed relatively poorly over the past decade. From the 1.05 level in early 2013 to now, the AUD/USD has depreciated by over 35%, while the US dollar index has risen by 28% during the same period. This is not just an AUD issue; the euro, yen, and Canadian dollar have also depreciated against the dollar, indicating a broad-based strong dollar cycle. Will the AUD continue to fall? The underlying question reflects that, in a strong dollar environment, it’s difficult for the AUD to sustain upward momentum.

In Q4 2024, the AUD/USD plummeted sharply, with an annual decline of about 9.2%. Entering 2025, influenced by escalating global trade tensions, the AUD once dropped to 0.5933, hitting a five-year low. Analysts generally believe that the main reason is that US tariff policies have hit global trade, leading to a decline in raw material exports, which directly weakens the AUD’s commodity currency attributes. Coupled with the difficulty in reversing the interest rate differential between the US and Australia, sluggish domestic economic conditions, and ongoing capital outflows, the AUD naturally remains under pressure.

However, by September 2025, some changes occurred. Iron ore and gold prices surged, and the Federal Reserve began signaling rate cuts, which boosted investors’ risk appetite. The AUD/USD rose to as high as 0.6636, reaching a new high since November 2024. This rebound indeed offered some hope.

But whether the AUD can truly recover depends mainly on three factors. First is the policy stance of the Reserve Bank of Australia (RBA). In Q3 2025, Australia’s inflation rose by 1.3% month-over-month, exceeding market expectations, making the central bank more cautious about cutting rates. Second is the US dollar’s trend. Although the Fed has started to cut rates, the US economy remains resilient, with the dollar index rebounding 3% from its low of 96, and the possibility of breaking above 100 is increasing. Lastly, the recovery of the Chinese economy directly influences demand for Australian resources. China’s real estate market remains sluggish, exerting long-term pressure on the AUD.

Major institutions also hold differing views on the AUD’s future. Morgan Stanley is relatively optimistic, expecting the AUD/USD to rise to 0.72 by the end of 2025, mainly based on the possibility that the RBA maintains a hawkish stance. UBS is more cautious, believing that global trade uncertainties are too high, and expects the rate to stay around 0.68 by year-end. CBA’s outlook is the most conservative, suggesting that the AUD’s rebound may be short-lived, with a forecast that after reaching a high in March 2026, it could decline again.

From a technical perspective, the AUD/USD currently oscillates between 0.63 and 0.66. In the short term, if inflation data continues to be favorable and the economy remains stable, the AUD may attempt to test above 0.66. But if global risk appetite deteriorates or the dollar strengthens again, the AUD could fall back toward 0.63 or even lower.

The AUD/CNY trend is also worth watching. Stable China-Australia trade relations have a positive impact on the AUD, but fluctuations in the RMB itself can also influence the pair. In the short term, considering the relative stability of the RMB, the AUD/CNY may fluctuate within the 4.6–4.75 range.

For traders, the AUD’s exchange rate volatility presents both risks and opportunities. If you’re interested in the AUD, you might consider a dual-direction trading strategy. In the short term, focus on range trading between 0.6370 and 0.6450, looking for breakout opportunities to follow the trend. The medium- to long-term direction will depend on the Fed’s policy shifts and whether global trade risks ease.

In summary, whether the AUD will continue to fall does not have an absolute answer. Currently, the AUD is in a stage of technical oscillation and fundamental contest, with both downside risks and rebound opportunities. The key is to closely monitor economic data releases and adjust trading strategies flexibly. If this week’s data reinforce expectations of rate cuts, consider positioning for long positions; otherwise, be cautious of dollar rebound pressures. All investments involve risks, and forex trading is no exception—investors could lose all their capital, so caution is essential.