Insights 
VT 
The Australian Dollar (AUD) is anticipated to consolidate within a range of 0.6465 to 0.6530. UOB Group analysts suggest that further declines in the AUD appear likely, with the next support level to watch being 0.6440.
In the last 24 hours, a sharp selloff saw the AUD plunge to a low of 0.6472, though trading higher at the open today. Downward momentum has slowed, and it is unlikely the AUD will weaken further in the immediate term. A consolidation within the range of 0.6465 to 0.6530 is more probable today.
Recent Market Movements
Over the past week, the AUD broke below the key level of 0.6555, indicating increased downward momentum. Analysts previously stated potential for the AUD to hit lows around 0.6520. The subsequent plunge to 0.6472 was unexpected, but further declines remain possible, with focus shifting to 0.6440, as long as the ‘strong resistance’ at 0.6575 is not breached.
The FXStreet Insights Team is composed of journalists compiling market observations. They include expert notes from both commercial and internal, along with external analysts, to offer comprehensive insights.
Given the recent sharp selloff to 0.6472, we see the Aussie dollar entering a temporary consolidation phase, likely trading within a 0.6465 to 0.6530 range. However, the broader trend for the next few weeks remains downward. Our focus is now on the next significant support level at 0.6440.
For traders sharing this bearish view, buying AUD/USD put options with a strike price near 0.6450 could be a viable strategy. This allows for capitalizing on a continued slide while defining the maximum risk to the premium paid. These positions would become profitable if the Aussie breaks below the current consolidation range in the coming weeks.
Key Economic Factors
This outlook is reinforced by the growing divergence in monetary policy we are seeing in late 2025. Recent data shows Australian inflation has cooled to 3.1%, prompting speculation the Reserve Bank of Australia may be the first to cut rates in early 2026. In contrast, the US Federal Reserve remains firm, with core inflation proving stubborn and holding above 2.8%, which supports a stronger US dollar.
We are also watching weakness in key commodity markets, which is weighing on the Australian dollar. Iron ore prices, a crucial Australian export, have slid nearly 12% over the last quarter amid slowing industrial demand from China, whose latest manufacturing PMI came in at a contractionary 49.7. Looking back at similar periods of Chinese industrial slowdowns, like in 2022, the AUD/USD consistently trended lower.
To manage costs and risk, we could implement a bear put spread. This would involve buying a put option at a strike like 0.6500 and simultaneously selling another put at a lower strike, such as 0.6400. This strategy lowers the initial cost of the trade and targets the specific downward move we anticipate.
It is critical to monitor the strong resistance level now established at 0.6575. A sustained break above this point would signal that our downward momentum thesis is no longer valid. Any bearish positions should be re-evaluated if the market approaches or breaches this key level.
