Australian Dollar Outlook: Why RBA Policy Keeps Bulls in Control

The Australian dollar has emerged as one of the more compelling beneficiaries of this week's sudden dovish reset in US rate expectations, and we see the setup aligning in a way that should keep RBA bulls leaning into their conviction. As FXStreet reports, the latest AUD forecast leans squarely on Reserve Bank of Australia positioning rather than domestic catalysts, and with the Federal Reserve now rapidly repricing toward easier policy, the cross-currents are tilting decisively in the Aussie's favor.

The macro backdrop doing the heavy lifting

Friday's release of a weak US July nonfarm payrolls print did more than rattle the dollar — it reset the entire policy trajectory. ING strategists note that the -20k headline figure carried weight well beyond the number itself, with more than 100,000 in downward revisions leaving average payroll growth at just 20,000 over the past three months. Financial markets responded by pricing out the possibility of a September Fed hike, yet ING highlights that 11 basis points remain priced for September, 28 for December, and 40 for April. That residual pricing leaves what we view as ample room for further dovish repricing to weigh on the dollar — a tailwind we expect to flow directly into AUD relative strength.

Where the RBA fits into the cross-currents

What anchors the Aussie case, in our assessment, is not merely a softer greenback but the persistence of the RBA's hawkish stance against a backdrop where other major central banks are tilting the opposite direction. The yield differential between Australia and its G10 peers has widened in a manner that should continue to attract capital flows out of funding currencies and into the Aussie. We see this reflected not in headline volatility but in the steadier undercurrent of buying interest on pullbacks — the kind of pattern that tends to persist as long as the policy gap holds. Liquidity absorption on dips is what gives RBA bulls the conviction to stay positioned.

Levels worth monitoring

The near-term calendar adds another decisive layer. July US CPI lands on Wednesday, and ING expects a headline print of 0.1% month-on-month versus 0.2% consensus, with core at 0.2% in line. A softer outcome would extend the dollar's slide and reinforce the conditions for AUD bulls; a stickier core print risks a partial mean-reversion in DXY but, in our view, is unlikely to derail the broader bearish dollar thesis that Friday's payrolls cemented. For traders, the levels that matter sit on the US Dollar Index rather than the Aussie itself. The DXY continues to hold beneath its 20-day exponential moving average at 100.35, with the 14-day RSI hovering near 37 — a configuration suggesting momentum remains weak without yet flashing oversold. A sustained close below the 99.38 swing low from mid-June would, in our assessment, accelerate the downside and open the path toward 99.00. Until that break materializes, the range-bound slide keeps AUD upside steady but measured, with Wednesday's CPI serving as the next decisive catalyst we are watching.