The Australian Dollar (AUD) is expected to stay within a range of 0.6465 to 0.6530. Analysts from UOB Group believe that the AUD may drop further, with the next support level at 0.6440. In the last 24 hours, there was a sharp sell-off, which caused the AUD to fall to a low of 0.6472; however, it has opened higher today. The downward momentum seems to be slowing, making it unlikely that the AUD will weaken significantly in the short term. A consolidation in the range of 0.6465 to 0.6530 is likely today.

Recent Market Movements

Last week, the AUD dipped below the important level of 0.6555, suggesting increased downward pressure. Analysts had previously noted the AUD could reach lows around 0.6520. The drop to 0.6472 was unexpected, but more declines could happen, especially with the focus shifting to 0.6440, unless it breaks through the strong resistance at 0.6575. The FXStreet Insights Team gathers market observations from journalists who include expert insights from commercial and internal sources, as well as external analysts, to provide a detailed view. Due to the recent sharp drop to 0.6472, the Australian dollar seems to be in a temporary consolidation phase, likely trading between 0.6465 and 0.6530. However, the overall trend in the coming weeks points downward. We are mainly focused on the next important support level at 0.6440. For traders who share this bearish view, buying AUD/USD put options with a strike price around 0.6450 could be a smart move. This allows traders to profit from a continued decline while managing the maximum risk to the cost of the premium. These positions will be profitable if the Aussie falls below the current consolidation range in the next few weeks.

Key Economic Factors

This outlook is supported by the growing differences in monetary policy as we approach late 2025. Recent data indicates that Australian inflation has dropped to 3.1%, raising speculation that the Reserve Bank of Australia may cut rates first in early 2026. Meanwhile, the US Federal Reserve remains strong, with core inflation remaining stubbornly above 2.8%, supporting a stronger US dollar. We are also observing weakness in key commodity markets, which is putting pressure on the Australian dollar. Iron ore prices, a major Australian export, have fallen nearly 12% over the last quarter due to slowing industrial demand from China. The latest manufacturing PMI from China shows a contraction at 49.7. Historically, similar slowdowns in Chinese industry, like in 2022, led to the AUD/USD trending lower. To manage costs and risks, we may consider using a bear put spread strategy. This involves buying a put option with a strike around 0.6500 and selling another at a lower strike, such as 0.6400. This approach reduces the initial trading cost and targets the expected downward movement. It’s crucial to keep an eye on the strong resistance level at 0.6575. If the market consistently breaks above this point, our bearish momentum view may no longer hold. Any negative positions should be reassessed if the market approaches or goes above this significant level. Create your live VT Markets account and start trading now.

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