USD to AUD Forecast

History of the USD to AUD pair

The US and Australia have had a friendly relationship and have always done trading with each other. In the past, the US dollar and the Australian pound were used for trading. However, in February, Australia moved from the pound and introduced the Australian dollar, commonly known as the AUD. The ISO standard for the Australian dollar and the US dollar is AUD/USD.

The USD/AUD pair has had its lows and downs over the years. Between 1980 and 2001, the pair jumped by 148% as it moved from a low of 0.8476 to a high of 2.10. It then declined by ~56% from its highest level in 2001 to a low of 0.9101 in August 2011. Since then, the pair has been in an overall upward trend. It has risen by about 15% in the past five years.

The Australian dollar is usually affected by a number of factors. First, it is affected by the overall commodity prices since Australia is well-known for its vast natural resources, which include coal, copper, and iron ore.

Second, the Chinese economy plays a huge role in the Australian economy because of the vast volume of trade that happens between the two countries. According to Lowy Institute, China buys more than two-thirds of all commodities that Australia produces.

Further, like other currency pairs, USD/AUD pair reacts to geopolitics and actions by the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed).

Latest USD to AUD forecast

The USD/AUD pair had a strong performance in 2022 as the US dollar index (DXY) surged to the highest level in more than two decades. This is due to the fact that America’s inflation jumped to the highest point in more than 40 years. As a result, the Fed decided to hike interest rates by 400 basis points and end its quantitative easing (QE) policy.

The RBA also hiked interest rates aggressively. However, in monetary policy, the actions of the Fed tend to have more weight compared to other central banks.

America’s inflation has dropped from a peak of 9.1% in June to 6.5% in December. Therefore, the pair dropped as the market raised expectations that the Fed will start its pivot in 2023.

China reopening

A key catalyst for the USD to AUD price will be the ongoing China reopening. The Chinese government ceased the zero-COVID policy that saw its economy grow at the slowest pace in decades. Most importantly, it ended some of its embargoes on Australian goods like iron ore.

Therefore, analysts believe that the Chinese economy will rebound in 2023. If this happens, Australia will benefit since it will boost its exports to China at the best prices.

RBA and Fed decisions

Recent data showed that inflation in Australia and the United States is easing while recession risks are rising. Therefore, there is a likelihood that the Fed and the RBA will pivot on their rate hikes this year. The RBA has already hinted that it is nearing its hiking cycle.

On the other hand, the Fed has pointed out that it will continue hiking rates for a while since the unemployment rate remains at a historic low. Therefore, the pair will react to the RBA and Fed dynamics in the next few months.

Signs of the Fed easing its interest rates policies will push the pair lower since it will lead to a risk-on sentiment in the market.

USD/AUD technical analysis

On the 1D chart, the USD/AUD pair has been in a strong bearish trend in the past few months after it peaked at 1.6212 on October 12. This decline saw the pair crash below the 50% Fibonacci Retracement level. It is now a few points above this retracement point.

At the same time, it has formed a death cross, which happens when the 200-day and 50-day moving averages make a bearish crossover. The Relative Strength Index (RSI) has drifted upwards while the pair formed a head and shoulders pattern.

Post this technical analysis, it is estimated that the pair will likely continue falling in the coming months, with the key reference level being at 1.300. This price is a few points below the 78.6% Fibonacci Retracement point and ~10% below the present level.

Transferring USD to AUD

There are many reasons why you might want to send US dollars to Australia. For example, you might be an American businessman with Australian employees or remote workers. Similarly, you might be buying goods from Australia or sending funds to your home for various purposes.

Fortunately, there are many easy ways of transferring USD to AUD, including wire transfers, online wallets like PayPal and Skrill, and money transfer services like Paysend and Wise.

The volume of funds sent between the US and Australia is enormous. Estimates are that the two-way goods trade between the two countries is worth about $40 billion. With services included, the volume is estimated to be worth about $60 billion per year.

The cost of sending money from the US to Australia is relatively negligible. It is always good to use a money transfer comparison site like MoneyTransfers.com to find the best rate.

Is it a good time to buy USD with AUD?

The Australian and American economies are going through major challenges. While the unemployment rate has declined, inflation remains stubbornly high. Therefore, using the analysis above, it is suspected that the USD/AUD pair will continue falling, meaning that it makes sense to hold Australian dollars.

Therefore, if you are interested in buying USD with AUD, it is recommended to wait for a while before you make the purchase. Doing so will give you a better price when the pair continues pulling back.

USD to AUD 6 month forecast next 6 months – analysis

The next six months will be important for the USD to AUD exchange rate. The most important catalyst that will determine the pair’s performance during this time is inflation. While America’s inflation has eased slightly in the past few months, some key parts of the economy show that it is still sticky.

For example, service inflation is still high while gasoline prices stay over $3 per gallon. Therefore, if inflation remains high and the unemployment rate is at a multi-decade low, the Fed will have the incentive to maintain a hawkish tone. This move will be bullish for the USD to AUD pair.

The other catalyst for the pair will be the Australian and Chinese relationship. A better relationship will mean that Australia will sell more goods and services to China, the second-biggest economy in the world.

The overall outlook of the pair is bearish, with a possibility of falling by about 10%.

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