The Australian dollar strengthens against the US dollar due to interest rate concerns and inflation risks.

    by VT Markets
    /
    Dec 24, 2025

    Potential Gains and Supports Analysis

    If the price breaks above 0.6707, it might rise further to 0.6800. The support level is at 0.6600, where the 21-day SMA is located. If it drops below 0.6600, the next target could be the 50-day SMA at 0.6550. A break below this could push prices down to 0.6500 and 0.6450. The Australian Dollar (AUD) is influenced by decisions made by the RBA regarding interest rates, prices of Iron Ore, and the health of the Chinese economy. High-interest rates support the AUD, while low rates weaken it. When Iron Ore prices rise, the AUD benefits due to Australia’s strong trade links with China. A favorable trade balance boosts the AUD’s value internationally. Currently, the AUD is on an upward trend and is gaining momentum by staying above 0.6600. This is mainly because the RBA is focused on controlling inflation, while the US Fed is expected to ease policies until 2026. This difference supports a stronger AUD/USD exchange rate.

    Strategic Considerations for Traders

    For traders, this situation suggests looking for further gains in the coming weeks. Consider buying call options with strike prices targeting the 0.6800 level, especially for January or February 2026 expirations. This strategy allows you to benefit from the upward trend while managing your risk. This optimistic outlook is backed by recent economic data. Australia’s quarterly inflation rate for Q3 2025 was 3.5%, remaining above the RBA’s target and supporting their cautious stance. On the other hand, the latest US PCE inflation for November 2025 dropped to 2.4%, giving the Fed more room to ease. Meanwhile, iron ore prices have remained strong above $120 per tonne. Create your live VT Markets account and start trading now.

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