The Aussie Faces Pressure, but Bulls Aren’t Done Yet. Forecast as of 19.09.2025 | LiteFinance
At first glance, the AUDUSD rally may have gone too far. Many bullish factors are already priced in, yet the Aussie continues to find support from monetary policy and stock indices. Let’s discuss it and make a trading plan.
The article covers the following subjects:
Major Takeaways
- Profit-taking on AUDUSD longs has triggered a correction.
- China’s fiscal stimulus capacity is limited.
- The Reserve Bank may halt its rate-cutting cycle.
- A move above $0.66 is a signal to buy the Aussie.
Weekly Fundamental Forecast for Australian Dollar
It’s a fine line between triumph and disappointment. After hitting an 11-month high, the Australian dollar plunged following the September FOMC meeting. Investors locked in profits on AUDUSD longs after Jerome Powell’s cautious remarks and with only one dissenter on the Committee. Then came more pressure: disappointing August jobs data in Australia gave bears fresh momentum.
The August–September AUDUSD rally looked like a honeymoon phase. Investors saw only the positives of the Aussie and ignored its flaws. Strong Q2 GDP growth and a resilient labor market hinted at limited room for RBA monetary easing. Derivatives priced in a cash rate cut in November and another move in early 2026. The Fed, meanwhile, could slash rates by as much as 150 bps. That seemed reason enough to buy the Aussie.
Central-Bank Rate Changes
Source: Bloomberg.
China was another source of support for AUDUSD. Its economy showed surprising resilience to tariffs, while hopes for fiscal stimulus provided a tailwind for its trading partners and their currencies. But not for long. In August, industrial output and consumption posted their weakest performance since early 2025, while fixed-asset investment for the first eight months fell to its lowest level, excluding the pandemic period.
According to Morgan Stanley, China’s fiscal space is limited. The main reason is the rapidly growing government debt. Interest payments rose to 2.2 trillion yuan, equal to 5.7% of budget spending — five times the 2015 figure.
China’s Government Debt Servicing Costs
Source: Bloomberg.
Morgan Stanley expects only a modest stimulus package of 0.5–1 trillion yuan from Beijing, which is unlikely to boost the Aussie. Still, it’s too early for AUDUSD bulls to give up.
Despite the unexpected August jobs contraction, unemployment remains low at 4.2%. RBA Assistant Governor Sarah Hunter says the central bank is close to returning inflation to the middle of its 2–3% target range. Governor Michele Bullock adds that strong consumer demand will limit the room for further rate cuts. Perhaps the cash rate won’t fall at all.
The Aussie is highly sensitive to global risk appetite, and the string of record highs in the S&P 500 can only be good news.
Weekly Trading Plan for AUDUSD
So, it’s too early for AUDUSD bulls to throw in the towel. I doubt the current pullback will evolve into a full trend reversal. A sustained move above 0.66 will be a clear buy signal.
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
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