Citi FX analysts provide insights into the performance of the Australian dollar against various currencies, and predict a challenging path for the Australian dollar.
According to the brokerage, the recent sharp drop in the exchange rate points to a long-term ceiling that formed at just below 110 yen to the Australian dollar last month. They expect any recovery to be capped between the 100-day and 200-day moving averages, which are currently between 100 and 102 yen to the Australian dollar.
Analysts also expect the AUD/JPY pair to fall below its recent lows of around 90 yen to the Australian dollar next year. For the near-term outlook for the AUD/USD, Citi expects the recovery to peak at $0.67-$0.68 to the Australian dollar, with a possible decline to $0.63-$0.64 in a risk-off environment by the end of the year.
In contrast to its performance against the yen and the US dollar, the Australian dollar is expected to rise against the New Zealand dollar. This expectation is reinforced by the Reserve Bank of New Zealand’s decision to ease monetary policy, a decision that Citi believes is likely to have set a bottom for the pair at around NZ$1.09 to the Australian dollar.
Citi expects the AUD/NZD exchange rate to rise to NZ$1.11 or NZ$1.12 in the near term. Furthermore, analysts would not be surprised to see the pair reach a 2022 high of around NZ$1.14/AUD in the next few months.
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