The Australian Dollar is now trading at its lowest point for July, around 0.6450 against the US Dollar. This drop comes after strong demand for the US Dollar due to encouraging US economic data and expectations surrounding the Federal Reserve’s upcoming monetary policy announcement.

Australian Inflation Data

Australia’s Consumer Price Index (CPI) increased by 0.7% in the second quarter of 2025. This was lower than the previous quarter’s rise of 0.9% and fell short of the expected 0.8%. The Reserve Bank of Australia’s Trimmed Mean CPI went up by 0.6% quarterly and 2.7% annually, also slightly missing forecasts. In June, the annual CPI rose to 1.9%, down from 2.1% in May. Following this news, the AUD/USD pair dropped below 0.6500. In the US, 104,000 new jobs were created in July, exceeding the expected 78,000. The GDP grew by 3% in the second quarter, outperforming the anticipated 2.4%. Market speculation is focused on the Federal Reserve’s upcoming rate decision. Many expect the central bank to keep interest rates steady. US President Donald Trump has called for a rate cut, considering the country’s economic situation. The AUD/USD pair has seen continued declines, staying below key support levels. Short-term support is noted at 0.6437, with resistance around 0.6470.

Market Analysis

The Australian Dollar is falling because local inflation is lower than expected. This reduces the likelihood that the Reserve Bank of Australia will raise interest rates, which weakens the currency. This is quite different from the strong US economy. Given this contrast, we suggest that currency traders consider buying put options on the AUD/USD pair. This strategy can be profitable if the currency continues to drop. It allows you to bet on the decline of the Australian Dollar while knowing your maximum potential loss. Our outlook is further supported by recent data from China, Australia’s largest trading partner, which showed that factory output slowed in June 2025. This typically leads to less demand for Australia’s raw materials, putting more pressure on its currency. Additionally, we learned last week that Australian consumer confidence hit a six-month low. In contrast, the US economy appears very strong. Recent data showed a 3% growth and an addition of 104,000 jobs in July. Just last week, Federal Reserve officials indicated that they are not in a rush to cut interest rates. This underlying strength should help keep the US Dollar in demand. This situation recalls the period from 2018 to 2019 when the US raised rates while Australia did not. That policy difference caused the AUD/USD to drop by over 10%. History indicates that when these two economies move in opposite directions, the trend can last for a while. We are closely monitoring the 0.6437 price level. If it drops below this, we could see a quicker decline toward 0.6350. Any bounce back toward the 0.6470 level may present an opportunity to make bearish bets. The upcoming Federal Reserve announcement will be a significant event that will impact the market. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now