Australian Dollar Price Forecast: Next on the downside emerges 0.6900
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UPGRADE- AUD/USD alternates gains with losses near the 0.7020 zone on Thursday.
- The US Dollar pushes harder and challenges its February highs amid rising yields.
- The Unemployment Rate in Australia held steady at 4.1% in January.
AUD/USD has come under renewed downside pressure in the past few days, correcting from fresh highs around 0.7150 hit earlier in the month. Meanwhile, the hawkish stance from the Reserve Bank of Australia (RBA), sticky inflation and pretty healthy domestic fundamentals continue to underpin the ongoing positive stance around the Aussie Dollar (AUD).
The Australian Dollar (AUD) remains under persistent pressure on Thursday, with AUD/USD deflating to the vicinity of 0.7020 band and clocking new multi-day lows after an initial uptick to the 0.7080 region in the wake of the January labour market report in Oz.
That said, the pair keeps navigating the lower end of its recent range against the backdrop of the relentless recovery in the US Dollar, as investors continue to speculate over the potential rate path from the Federal Reserve (Fed) this year, while solid US data releases also help the upward feeling.
Australia: cooling, but far from cracking
Australia is slowing, yes, but it is doing so in a controlled, almost orderly way. This does not look like an economy losing its footing. It looks more like one shifting down a gear after running a little hot.
The January Purchasing Managers’ Index (PMI) surveys tell that story neatly. Manufacturing at 52.3 and Services at 56.3 both remain comfortably in expansion. That is not boom territory, but it is still healthy. Retail Sales are holding up, the trade surplus widened to A$3.373 billion at the end of 2025, and Gross Domestic Product (GDP) expanded 0.4% QoQ in Q3, lifting annual growth to 2.1%. In other words, broadly in line with what the Reserve Bank of Australia (RBA) expected.
The labour market? Not spectacular, but solid. Employment rose by 17.8K in January, a touch below forecasts, while the Unemployment Rate stayed anchored at 4.1%. That is not what stress looks like.
Where things get more complicated is inflation. The Consumer Price Index (CPI) rose 3.8% YoY in December. The trimmed mean printed at 3.3% YoY and 3.4% QoQ in Q4, still sitting uncomfortably above the midpoint of the RBA’s 2% to 3% target band. And if that was not enough, Melbourne Institute inflation expectations jumped to 5.0% in February, the highest since August 2023. That is the kind of number central bankers do not ignore.
Credit growth also suggests policy is restrictive but not suffocating after Home Loans rose 10.6% QoQ in Q4 and Investment Lending increased 7.9%.
China: steady breeze, not a tailwind
China continues to act as a stabiliser for the Australian Dollar, though it is hardly providing rocket fuel.
The economy expanded 4.5% YoY in Q4 and 1.2% QoQ, while Retail Sales rose 0.9% YoY in December. That is steady, respectable. But not the kind of momentum that changes the global narrative.
The January PMI split was telling. Official Manufacturing and Non-Manufacturing slipped into contraction at 49.3 and 49.4, respectively. Meanwhile, Caixin Manufacturing and Services held above 50, printing 50.3 and 52.3. Larger state-linked sectors look softer; smaller private firms somewhat more resilient.
The trade surplus surged to $114.1 billion in December, yet inflation remains muted. The Consumer Price Index (CPI) rose just 0.2% YoY, and Producer Prices fell 1.4% YoY. That is not reflation. It is lingering disinflation.
On the policy side, the People’s Bank of China (PBoC) kept the one-year and five-year Loan Prime Rates (LPR) unchanged at 3.00% and 3.50%. The message is calm and supportive, not aggressive; it means stability over stimulus.
RBA: restrictive, but not reckless
The RBA’s move to lift the Official Cash Rate (OCR) to 3.85% earlier this month came with a clear signal: inflation is still the priority.
Updated projections show price pressures remaining above target for much of the forecast horizon. The Minutes were explicit; without the latest hike, inflation would likely have stayed above target for too long. In addition, policymakers judged that the balance of risks had shifted enough to justify tightening.
But this is not an autopilot hiking cycle. There is no pre-commitment. The path forward is data dependent, full stop.
Markets are pricing in roughly 41 basis points of additional tightening this year. That is not aggressive, but it is enough to keep yield support under the Australian Dollar.
Positioning: rebuilding, not overcrowded
Commodity Futures Trading Commission (CFTC) data show non-commercial traders (speculators) lifted net longs to around 33.2K contracts in the week to February 10, the strongest since December 2017.
This does not feel like a squeeze. It feels like investors are quietly rebuilding exposure.
Furthermore, open interest eased to around 247.2K contracts, showing that conviction is improving, but the trade is not crowded. There is still room if sentiment continues to firm.
In short, investors are dipping their toes back into the Aussie, cautiously but deliberately.
What’s next
Near term: the US Dollar still dictates the tempo. US data surprises, tariff rhetoric or geopolitical noise can quickly swing AUD/USD. At home, upcoming preliminary PMI figures will help confirm whether the soft-landing story remains intact.
Risks: the AUD is a high beta currency. If global risk appetite deteriorates, if China wobbles again, or if the Greenback regains strong momentum, the unwind could be sharp.
Technical backdrop
In the daily chart, AUD/USD trades at 0.7051. The 55-, 100-, and 200-day Simple Moving Averages (SMA) all rise, with the shorter SMA positioned above the longer ones, reinforcing a bullish bias. Price holds above these references, with the 55-day SMA at 0.6808 offering nearby dynamic support. The Relative Strength Index (14) at 60.77 shows positive momentum without overbought conditions. Immediate resistance aligns at 0.7158, followed by 0.7283, and a close above the former could open the path toward the latter.
Measured from the 0.6421 low to the 0.7147 high, the 23.6% retracement at 0.6976 offers initial support, while the 38.2% retracement at 0.6870 marks the next downside pivot. Pullbacks contained above the first level would keep the broader uptrend intact; a break lower could expose the second. The Average Directional Index (14) eases to 44.86, indicating trend strength remains elevated but is moderating, leaving the bias constructive as long as the pair holds above the cited Fibonacci supports.
(The technical analysis of this story was written with the help of an AI tool.)
Bottom line: constructive, but not complacent
Australia’s macro backdrop is resilient. The RBA remains restrictive. Positioning is improving. China is stable enough.
That keeps the broader bias tilted to the upside.
But this is not a defensive currency. It thrives in constructive global conditions and struggles when sentiment turns. As long as risk appetite holds and the US Dollar does not stage a meaningful comeback, dips should attract buyers. If that changes, so does the story.
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.
- AUD/USD alternates gains with losses near the 0.7020 zone on Thursday.
- The US Dollar pushes harder and challenges its February highs amid rising yields.
- The Unemployment Rate in Australia held steady at 4.1% in January.
AUD/USD has come under renewed downside pressure in the past few days, correcting from fresh highs around 0.7150 hit earlier in the month. Meanwhile, the hawkish stance from the Reserve Bank of Australia (RBA), sticky inflation and pretty healthy domestic fundamentals continue to underpin the ongoing positive stance around the Aussie Dollar (AUD).
The Australian Dollar (AUD) remains under persistent pressure on Thursday, with AUD/USD deflating to the vicinity of 0.7020 band and clocking new multi-day lows after an initial uptick to the 0.7080 region in the wake of the January labour market report in Oz.
That said, the pair keeps navigating the lower end of its recent range against the backdrop of the relentless recovery in the US Dollar, as investors continue to speculate over the potential rate path from the Federal Reserve (Fed) this year, while solid US data releases also help the upward feeling.
Australia: cooling, but far from cracking
Australia is slowing, yes, but it is doing so in a controlled, almost orderly way. This does not look like an economy losing its footing. It looks more like one shifting down a gear after running a little hot.
The January Purchasing Managers’ Index (PMI) surveys tell that story neatly. Manufacturing at 52.3 and Services at 56.3 both remain comfortably in expansion. That is not boom territory, but it is still healthy. Retail Sales are holding up, the trade surplus widened to A$3.373 billion at the end of 2025, and Gross Domestic Product (GDP) expanded 0.4% QoQ in Q3, lifting annual growth to 2.1%. In other words, broadly in line with what the Reserve Bank of Australia (RBA) expected.
The labour market? Not spectacular, but solid. Employment rose by 17.8K in January, a touch below forecasts, while the Unemployment Rate stayed anchored at 4.1%. That is not what stress looks like.
Where things get more complicated is inflation. The Consumer Price Index (CPI) rose 3.8% YoY in December. The trimmed mean printed at 3.3% YoY and 3.4% QoQ in Q4, still sitting uncomfortably above the midpoint of the RBA’s 2% to 3% target band. And if that was not enough, Melbourne Institute inflation expectations jumped to 5.0% in February, the highest since August 2023. That is the kind of number central bankers do not ignore.
Credit growth also suggests policy is restrictive but not suffocating after Home Loans rose 10.6% QoQ in Q4 and Investment Lending increased 7.9%.
China: steady breeze, not a tailwind
China continues to act as a stabiliser for the Australian Dollar, though it is hardly providing rocket fuel.
The economy expanded 4.5% YoY in Q4 and 1.2% QoQ, while Retail Sales rose 0.9% YoY in December. That is steady, respectable. But not the kind of momentum that changes the global narrative.
The January PMI split was telling. Official Manufacturing and Non-Manufacturing slipped into contraction at 49.3 and 49.4, respectively. Meanwhile, Caixin Manufacturing and Services held above 50, printing 50.3 and 52.3. Larger state-linked sectors look softer; smaller private firms somewhat more resilient.
The trade surplus surged to $114.1 billion in December, yet inflation remains muted. The Consumer Price Index (CPI) rose just 0.2% YoY, and Producer Prices fell 1.4% YoY. That is not reflation. It is lingering disinflation.
On the policy side, the People’s Bank of China (PBoC) kept the one-year and five-year Loan Prime Rates (LPR) unchanged at 3.00% and 3.50%. The message is calm and supportive, not aggressive; it means stability over stimulus.
RBA: restrictive, but not reckless
The RBA’s move to lift the Official Cash Rate (OCR) to 3.85% earlier this month came with a clear signal: inflation is still the priority.
Updated projections show price pressures remaining above target for much of the forecast horizon. The Minutes were explicit; without the latest hike, inflation would likely have stayed above target for too long. In addition, policymakers judged that the balance of risks had shifted enough to justify tightening.
But this is not an autopilot hiking cycle. There is no pre-commitment. The path forward is data dependent, full stop.
Markets are pricing in roughly 41 basis points of additional tightening this year. That is not aggressive, but it is enough to keep yield support under the Australian Dollar.
Positioning: rebuilding, not overcrowded
Commodity Futures Trading Commission (CFTC) data show non-commercial traders (speculators) lifted net longs to around 33.2K contracts in the week to February 10, the strongest since December 2017.
This does not feel like a squeeze. It feels like investors are quietly rebuilding exposure.
Furthermore, open interest eased to around 247.2K contracts, showing that conviction is improving, but the trade is not crowded. There is still room if sentiment continues to firm.
In short, investors are dipping their toes back into the Aussie, cautiously but deliberately.
What’s next
Near term: the US Dollar still dictates the tempo. US data surprises, tariff rhetoric or geopolitical noise can quickly swing AUD/USD. At home, upcoming preliminary PMI figures will help confirm whether the soft-landing story remains intact.
Risks: the AUD is a high beta currency. If global risk appetite deteriorates, if China wobbles again, or if the Greenback regains strong momentum, the unwind could be sharp.
Technical backdrop
In the daily chart, AUD/USD trades at 0.7051. The 55-, 100-, and 200-day Simple Moving Averages (SMA) all rise, with the shorter SMA positioned above the longer ones, reinforcing a bullish bias. Price holds above these references, with the 55-day SMA at 0.6808 offering nearby dynamic support. The Relative Strength Index (14) at 60.77 shows positive momentum without overbought conditions. Immediate resistance aligns at 0.7158, followed by 0.7283, and a close above the former could open the path toward the latter.
Measured from the 0.6421 low to the 0.7147 high, the 23.6% retracement at 0.6976 offers initial support, while the 38.2% retracement at 0.6870 marks the next downside pivot. Pullbacks contained above the first level would keep the broader uptrend intact; a break lower could expose the second. The Average Directional Index (14) eases to 44.86, indicating trend strength remains elevated but is moderating, leaving the bias constructive as long as the pair holds above the cited Fibonacci supports.
(The technical analysis of this story was written with the help of an AI tool.)
Bottom line: constructive, but not complacent
Australia’s macro backdrop is resilient. The RBA remains restrictive. Positioning is improving. China is stable enough.
That keeps the broader bias tilted to the upside.
But this is not a defensive currency. It thrives in constructive global conditions and struggles when sentiment turns. As long as risk appetite holds and the US Dollar does not stage a meaningful comeback, dips should attract buyers. If that changes, so does the story.
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.
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