Australian dollar advances 1% against US currency

Australian dollar advances 1% against US currency

The Australian Dollar (AUD) has shown notable strength against the US Dollar (USD), appreciating by 1% as of September 2, 2025. This performance is driven by several key factors, including improving market sentiment stemming from recent trade agreements and economic indicators.

The AUD/USD pair has been on an upward trajectory, bolstered by the announcement of a trade agreement between the United States and Japan. This agreement includes a 15% tariff on Japanese exports to the US, which has positively impacted market sentiment [1]. Additionally, ongoing US-China trade negotiations are gaining traction ahead of the August 12 deadline, further supporting the AUD's strength.

The Australian Dollar's recent gains are also influenced by the Westpac Leading Index, which, despite slowing to 0.03% in June, still reflects a positive economic outlook. The Reserve Bank of Australia (RBA) has indicated that further rate cuts may be warranted, though the timing and extent of easing remain under consideration [1].

Technical indicators also suggest a bullish bias for the AUD/USD pair. The 14-day Relative Strength Index (RSI) is above the 50 mark, and the pair has moved above the nine-day Exponential Moving Average (EMA), indicating strong short-term price momentum [1]. The AUD/USD pair is currently trading around 0.6560 and has the potential to target the eight-month high of 0.6595.

Market expectations for the US Federal Reserve's (Fed) monetary policy also play a role. While some Fed officials, such as Christopher Waller, advocate for immediate rate cuts, others, like FOMC Governor Adriana Kugler, believe that restrictive monetary policy is essential to keep inflationary psychology in check [1]. This uncertainty adds to the overall market sentiment, favoring the AUD.

In conclusion, the Australian Dollar's 1% appreciation against the US Dollar is a result of improving trade relations, positive economic indicators, and favorable technical conditions. Investors should closely monitor these factors as they may continue to influence the AUD/USD pair's performance.

References:
[1] Mitrade Insights. (2025, July 23). FXStreet AUDUSD 202507231024. Retrieved from https://www.mitrade.com/insights/forex-analysis/more/fxstreet-AUDUSD-202507231024