Insights 
VT 
The Australian Dollar (AUD) is trading lower against the US Dollar (USD) despite improved market sentiment from a US-Australia trade deal. The agreement between US President Trump and Australian Prime Minister Albanese involves an investment of USD 8.5 billion in critical minerals, each country pledging at least USD 1 billion into mining projects over six months.
The US Dollar is gaining ground as it recovers from intraday losses. This recovery comes amid a federal government shutdown in its third week. The Fed indicates a 99% probability of a rate cut in both October and December. The People’s Bank of China keeps loan rates steady, with China’s GDP growing 4.8% year-over-year.
Audusd Technical Analysis
AUD/USD is trading around 0.6510 on Tuesday with a bearish market bias in technical charts. The pair faces resistance at various key technical levels. The Australian Dollar remains weak, particularly against the USD, with a key focus on economic indicators and market sentiment.
The Australian Dollar is influenced by factors such as RBA interest rates, iron ore prices, China’s economic health, and Australia’s trade balance. High interest rates, positive China growth, and trade surpluses benefit the AUD. Conversely, economic downturns in these areas negatively affect it.
The Australian Dollar is showing significant weakness against the US Dollar, and we see this trend continuing in the near term. A major US-Australia critical minerals deal, which is positive for the long run, is being overshadowed by more immediate concerns. The market is focused on the high probability of an interest rate cut by the Reserve Bank of Australia next month.
We believe traders should anticipate further downside for the Aussie, especially as Australia’s unemployment rate unexpectedly rose to 4.5% in September 2025, its highest level in nearly four years. This situation mirrors past cycles, like the one seen in the late 2010s, where rising unemployment directly preceded RBA rate cuts and a weaker AUD. With markets pricing in a November rate cut, any short-term rallies in the AUD/USD pair present selling opportunities.
Strength Of The US Dollar
On the other side of the trade, the US Dollar is displaying unusual strength despite a government shutdown and the Federal Reserve signaling rate cuts for October and December. The US Dollar Index is holding firm around 98.70, suggesting its safe-haven appeal is outweighing domestic political issues. This resilience indicates that even with expected Fed easing, the US economy is viewed as being in a better position than its peers.
The situation in China, Australia’s largest trading partner, adds to the uncertainty and weighs on the Aussie dollar. While recent Chinese economic data showed some bright spots, the broader trend of slowing year-over-year GDP growth continues to create headwinds. We’ve seen how sensitive the AUD is to this, especially with iron ore prices, a key Australian export, which saw significant volatility during 2024 and 2025 due to concerns over Chinese demand.
Given this backdrop, we see opportunities in positioning for a lower AUD/USD exchange rate over the coming weeks. Derivative traders could consider buying put options on the AUD/USD or establishing short positions in AUD futures contracts. The technical chart supports this bearish view, with the next major support levels for the pair located around the 0.6414 mark and potentially even lower towards 0.6372.
