The AUD to USD exchange rate is currently biased towards a bullish outlook.
Key drivers include rising interest rates in Australia, with the Reserve Bank of Australia expected to increase rates to combat inflation. This contrasts with forecasts for the U.S. Federal Reserve to implement rate cuts in 2026, which could weaken the USD. Additionally, positive economic forecasts for Australia suggest growth that may further support the AUD.
Near-term, the AUD/USD is expected to trade in a stable range, maintaining its position above recent lows while potentially facing upward pressure.
Upside risks include stronger than anticipated economic performance from Australia, while downside risks stem from global shifts away from using the USD in trade, particularly if ASEAN countries favor local currencies.