I’ve been looking at the AUD (Australian dollar) price trend chart recently, and there’s a phenomenon worth paying attention to: over the past decade or more, the rebound highs of the AUD have been getting lower and lower, with the overall picture showing a downward trend. Friends who do carry trades probably feel it too. The reason the AUD is falling isn’t just an issue with the AUD itself—behind it are more complex structural factors at work.

From 2013 to now, the AUD has depreciated versus the US dollar by more than 35%, while over the same period the US dollar index has risen by more than 28%. This isn’t only about the AUD. The euro, the yen, and the Canadian dollar have also been dragged down and “crushed” by the US dollar. To put it plainly, a large part of the fundamental reason the AUD is weakening is that the US dollar is simply too strong. This current strong-dollar cycle hasn’t ended completely yet, so even if the AUD rebounds, it’s still difficult for it to hold at high levels.

But the AUD’s problems don’t stop there. In the past, the AUD was treated as a “darling” high-interest currency mainly because Australia’s interest rates had long been clearly higher than those in the US, attracting large inflows of capital through carry trades. Now, with the RBA cash rate at around 4%, it still looks decent, but compared with the “golden age” of 2009–2011—when rates were obviously higher by a large margin than the US dollar—its appeal has fallen significantly. As the interest-rate advantage shrinks, the halo of the AUD as a high-interest currency fades as well.

There’s another very key point: Australia’s export mix is too dependent on iron ore, coal, and energy, and China is the largest buyer. In recent years, China’s economic recovery has been less than expected; with raw material demand falling, the AUD’s commodity-currency attribute has been directly hit. That’s also why the China factor carries a large weight among the reasons for the AUD’s decline.

After 2024, the situation improved somewhat. As commodity prices rebounded, expectations for Fed rate cuts warmed up, and the US dollar index fell back, the AUD indeed rebounded from the lows. As of mid-2026, the AUD has already recovered a fair amount versus the lows of 2022–2023. But every time the AUD approaches the prior high range, selling pressure in the market increases noticeably—indicating that market confidence in the AUD is still limited.

From a medium- to long-term perspective, whether the AUD can truly break into a bull market mainly depends on three conditions: whether the RBA can maintain a relatively hawkish stance, whether China’s demand improves in a real and substantive way, and whether the US dollar moves into a structural weakening phase. As of now, these three conditions are not all satisfied at the same time. Morgan Stanley expects the AUD year-end target price to be 0.725, and Goldman Sachs has raised its forecast range for the next 3–12 months to 0.72–0.74, but the assumptions behind these optimistic forecasts are all that the US economy achieves a soft landing and that the US dollar index declines.

My personal observation is that the AUD’s short-term pressure mainly comes from the interaction between RBA and Fed policies, with changes in the interest-rate differential becoming the key driver. The long-term bullish outlook, on the other hand, depends on the recovery of Australia’s resource exports and the commodity cycle. Instead of trying to predict the AUD’s direction with precision, it may be better to treat the AUD/USD as a commodity currency that trades in a range, focusing on entry and exit points at the boundaries of the range and on risk control.

Because the AUD has high liquidity, strong and regular volatility behavior, and a clearly distinct economic structure, it’s relatively easier to get a medium- to long-term trend read right. If you’re interested in forex trading, AUD/USD is indeed a good choice, and trading in ranges with technical indicators can also offer plenty of opportunities.