The Australian Dollar (AUD) may experience a downturn, potentially testing the 0.6670 level. A break below this point could occur, yet any further decrease is predicted not to reach 0.6640. Over the next 24 hours, the AUD rose to 0.6707 before closing higher at 0.6692, marking a 0.27% increase.
In the coming weeks, the AUD is expected to fluctuate in a range between 0.6640 and 0.6730. Despite reaching a 14-month high of 0.6727 late last month, upward momentum has moderated. This, paired with overbought conditions, suggests a period of range trading ahead for the AUD. Resistance levels stand at 0.6695 and 0.6710, as per forecasts from UOB Group analysts Quek Ser Leang and Peter Chia.
Projected Trading Range
We see the Australian dollar likely trading within a range for the next few weeks, as the upward momentum we saw late last year has faded. A drift lower toward 0.6670 seems possible in the short term. The pair is expected to stay broadly contained between 0.6640 and 0.6730.
This view is supported by the central bank stances we observed at the end of 2025. The Reserve Bank of Australia held rates steady at 4.35% in its final meeting of the year, while the US Federal Reserve maintained a cautious tone, pushing back on expectations for imminent rate cuts. This policy outlook limits significant upside for the AUD against a steady US dollar.
Furthermore, key commodity prices are offering limited support, which often caps the Aussie dollar’s strength. Iron ore prices have softened to around $132 per tonne after peaking above $140 in late December 2025. This coincides with recent data from China, which showed its December manufacturing PMI at 49.0, indicating a continued contraction in factory activity.
Range Bound Strategies
Given this expectation for range-bound trading, strategies that profit from low volatility and time decay could be favorable. Selling out-of-the-money call options with strike prices above the 0.6730 resistance level may be one approach. This would generate premium as long as the AUD/USD fails to break out to the upside.
Similarly, traders could consider selling put options with strikes below the major support level of 0.6640. This allows for collecting income if the currency pair remains within its predicted channel. The key is that these positions benefit from the currency staying relatively stable over the coming weeks.
