Bias: bearish-to-range-bound; the pair sits below its 90-day average and in the lower half of the 3-month range.
Key drivers:
- Rate gap: Fed easing later in 2026 while the RBA hints at tightening, narrowing the USD-AUD gap and keeping AUD supported, especially if global risk appetite holds.
- Macro factor: January AU CPI and jobs data could push AUD higher if figures surprise, with a firm inflation reading boosting expectations for tighter domestic policy.
- Risk/commodities: China’s softer inflation and weaker demand for Australian exports weigh on the AUD, with miners' prices sensitive to China trends.
Range: The pair is likely to drift in the lower half of its 3-month range, with a credible chance of testing the lower edge unless US data surprises.
What could change it:
- Upside risk: stronger US data or a hawkish Fed stance lifting the dollar could push USD/AUD higher, especially if risk appetite cools.
- Downside risk: softer US data or clearer signals of Fed easing would reduce dollar demand and let AUD lead, narrowing the gap.
