Aussie Surges As ‘Sell America’ Gains Traction. Forecast as of 21.01.2026 | LiteFinance
Australia seems so far away that the trade war between the US and Europe will hardly hurt it. This is a strong argument for investors to park their money in this country. The RBA is also helping the AUD/USD pair. Let’s discuss these topics and make a trading plan.
The article covers the following subjects:
Major Takeaways
- Australia could become a safe haven.
- The RBA will be one of the first central banks to start raising rates.
- China has coped with US tariffs.
- Long trades on the AUD/USD pair can be opened with targets of 0.695 and 0.705.
Monthly Fundamental Forecast for Australian Dollar
It is best to stay away from the epicenter of a nuclear blast. With a trade war looming between the US and Europe, the Australian and New Zealand dollars are performing better than safe-haven currencies. The countries are so far away that investors are inevitably asking themselves whether they are the best place to invest their money. As a result, AUD/USD bulls have a fresh advantage.
The aussie’s gains in 2025 were driven by three factors: the remarkable resilience of the Chinese economy to tariffs, the unbridled rally in the US stock market, and finally, the end of the Reserve Bank’s monetary easing cycle with the prospect of a cash rate hike in 2026.
The growth of the Chinese economy to the 5% target set by the authorities in 2025 and a record foreign trade surplus of $1.19 trillion became possible thanks to a 5.5% jump in exports. Foreign shipments reached 33% of GDP, the highest figure since 1997. All this in a country that is under the most serious pressure from US tariffs. China has effectively rerouted its supply chains and achieved sensational results, allowing not only the yuan to strengthen, but also its proxy currency, the Australian dollar.
Estimated Earnings on Australian and Global Stock Markets
Source: Bloomberg.
However, in the fourth quarter, China’s economic growth slowed from 4.8% to 4.5%, which is a worrying sign for AUD/USD quotes. The same applies to the collapse of US stock indices due to Donald Trump’s tariff threats against Europe. You cannot build your happiness on someone else’s misfortune, but the Australian stock market, which initially lagged the global market in expected corporate profits, may benefit from Australia’s remoteness from the US-EU conflict.
The inflow of capital could become an additional growth driver for the AUD/USD pair. However, the main driver is in the hands of the Reserve Bank of Australia. After Australian inflation slowed in November and RBA Deputy Governor Andrew Hauser commented on the regulator’s cautious stance, the futures market reduced the chances of a cash rate hike in May from almost 100% to 70%. However, the regulator is ready to start a cycle of monetary tightening earlier than other developed countries.
Expectations for Interest Rates in Australia and Other Developed Countries
Source: Bloomberg.
Against this backdrop, the Australian dollar has become a top choice on Forex. Judging by its strong performance in early 2026, the aussie appears poised to meet high expectations. Even the greenback’s strengthening ahead of Donald Trump’s tariff threats failed to drag AUD/USD quotes down. The risks of a trade war between the US and Europe allowed the pair to surge higher.
Monthly AUDUSD Trading Plan
The strategy of buying the AUD/USD pair on pullbacks with a target of 0.682 proved successful. Meanwhile, long positions can be maintained and increased, while the targets can be shifted higher to 0.695 and 0.705.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of AUDUSD in real time mode
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance broker. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2014/65/EU.
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