AUD/USD Outlook 2026: What to Watch in the Aussie vs US Dollar

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AUD/USD trades to 0.6690 ahead of the weekend, holding a steady uptrend into January as markets price in a hawkish Reserve Bank of Australia outlook and expectations of later US rate cuts than previously anticipated.

Global investors are closely watching the pair after it put in a fresh yearly high near 0.6766 before giving back gains on account of a below-consensus inflation print and suggestions by RBA Deputy Governor Hauser that the central bank was in no rush to raise interest rates again.

Context

If you are monitoring near-term exchange rate moves, a cross-currency exchange tool can help place the AUD/USD position into context by letting you check where the pair is trading today and how it has performed recently.

Comparing AUD/USD with other commodity-linked pairs such as AUD/CAD can help determine whether the move is being driven primarily by the Australian dollar or by broader US dollar weakness.

A further comparison with less correlated pairs such as EUR/USD or USD/JPY can indicate whether broader US dollar trends are also influencing AUD/USD.

AUD/USD Performance: Current Market Snapshot

The AUD/USD pair has risen steadily through the start of 2026 as sentiment around central bank policy has shifted. Traders are now watching whether the pair can sustain gains above 0.6750, which would signal further upside momentum.

Short-term technical signals show that AUD/USD remains in an uptrend and is attempting to solidify a fresh high in the overall structure before major US data releases later this week.

Australia’s CPI data for November 2025 showed easing inflation at 3.4%, below forecasts but still above target, contributing to expectations that the RBA may tighten policy further rather than cut rates soon.

Commodity Prices Continue to Support the Australian Dollar

Australia’s currency remains closely tied to developments in global commodity markets, and recent strength in iron ore and other base metals has helped support AUD demand.

Rising commodity prices have improved Australia’s terms of trade and underpinned export revenues, reinforcing the case for a stronger Australian dollar in the near term.

Demand from China and broader Asia remains a key driver of bulk commodity flows, while record highs in some metals markets have fed into a more positive external backdrop for the AUD.

Diverging Central Bank Paths: RBA Versus the Federal Reserve

Differences in monetary policy outlooks between Australia and the United States remain central to AUD/USD dynamics. The Reserve Bank of Australia’s shift toward a potentially tighter stance contrasts with the US Federal Reserve’s anticipated easing path later in 2026.

Market pricing now reflects a reduced probability of imminent Fed tightening and a growing chance of rate cuts later in the year, which has weighed on the US dollar and benefited AUD/USD overall.

Improving Risk Sentiment Lifts Commodity-Linked Currencies

Global risk sentiment has generally improved, encouraging flows into growth and yield-sensitive assets such as the Australian dollar.

AUD/USD’s recent winning streak across successive sessions illustrates the positive impact of constructive risk sentiment and relative central bank positioning.

Key Risks and Data Points to Watch Going Forward

Despite the supportive tone, the outlook for AUD/USD remains conditional on incoming economic data and policy signals.

Key releases to watch include the upcoming US ISM Services PMI, JOLTs job openings, and the full fourth-quarter Australian CPI report due later in January.

The Reserve Bank of Australia meeting and any shifts in guidance within the RBA’s minutes will be critical, especially in light of debate over inflation persistence and the possibility of further rate increases.

Is the AUD/USD Rally Likely to Last?

The sustainability of the AUD/USD rally in 2026 depends on whether hawkish Australian risk premia are validated by data and whether the US dollar continues to face downward pressure as traders pivot toward later Fed easing.

Continued strength in commodity demand, stable growth indicators out of Asia, and confirmation that US monetary policy is becoming more accommodative would all argue for further AUD/USD upside.

However, renewed US dollar strength, an unexpectedly strong US jobs report, or a sharper global risk off period could see gains capped, with volatility likely around key macro releases.