The market bias for the USD to AUD exchange rate is currently bearish. Recent forecasts indicate a weakening USD driven by expected interest rate cuts from the Federal Reserve, aiming for three reductions by mid-2026.
On the Australian side, the Reserve Bank of Australia is likely to raise interest rates as inflation has exceeded target levels, which should support the AUD. Additionally, improving global economic growth and rising commodity prices could further enhance the AUD’s strength.
In the near term, the USD/AUD pair is expected to trade within a stable range, reflecting volatility around current market sentiment. The price has shown stability within a tight range, trading at 7-day highs near recent levels.
Upside risks include stronger-than-expected economic performance in Australia or further cuts in USD interest rates, while downside risks could arise from geopolitical tensions or economic setbacks affecting Australian exports or consumer confidence.