The AUD to USD exchange rate is currently biased towards a bullish outlook. Key drivers include the anticipated interest rate hike by the Reserve Bank of Australia (RBA), which is expected to rise to 3.85% in February. This comes as inflation surpasses the RBA’s target range. In contrast, the Federal Reserve is expected to pursue further rate cuts, which could pressure the USD. Moreover, the Australian economic outlook remains positive due to strong commodity demand, particularly from China, which bolsters the AUD.
In terms of near-term trading, the AUD/USD is expected to fluctuate within a stable range, reflecting recent price movements which have seen the pair hold steady around 2.2% above its three-month average. Upside risks include unexpected strength in commodity prices, while downside risks could arise from any sentiment shifts towards economic instability or a more aggressive Fed monetary policy.
