The Australian Dollar (AUD) may face a decline, possibly testing the 0.6670 level. If it drops below this, it is unlikely to fall past 0.6640. In the next 24 hours, the AUD increased to 0.6707 and closed at 0.6692, up by 0.27%. In the coming weeks, the AUD is expected to trade between 0.6640 and 0.6730. Even though it reached a 14-month high of 0.6727 last month, its upward momentum has slowed. This, along with overbought conditions, suggests that the AUD will trade within a range soon. Analysts from UOB Group, Quek Ser Leang and Peter Chia, identify resistance levels at 0.6695 and 0.6710.

Projected Trading Range

We anticipate that the Australian dollar will trade within a range for the next few weeks, as the strong growth seen late last year has diminished. A slight decrease toward 0.6670 seems possible in the short term, with expectations that it will remain mostly between 0.6640 and 0.6730. This perspective is supported by the actions of central banks noted at the end of 2025. The Reserve Bank of Australia kept rates steady at 4.35% in its last meeting of the year. Meanwhile, the US Federal Reserve remained cautious, not indicating any immediate rate cuts. This policy stance limits the potential increase for the AUD compared to a stable US dollar. Additionally, important commodity prices are not providing much support, which usually limits the strength of the Aussie dollar. Iron ore prices have dropped to about $132 per tonne after exceeding $140 in late December 2025. Recent data from China showed a December manufacturing PMI of 49.0, signaling a continued decrease in factory activity.

Range Bound Strategies

With this range-bound expectation, strategies that take advantage of low volatility could be beneficial. One approach may be selling out-of-the-money call options with strike prices above the resistance level of 0.6730. This can generate premium income as long as the AUD/USD does not rise above this level. Traders might also want to consider selling put options with strike prices below the key support level of 0.6640. This approach allows for earning income if the currency pair stays within the expected range. The aim is to benefit from the currency’s stability over the next few weeks. Create your live VT Markets account and start trading now.

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