Australian Dollar Outlook: AUD/USD Shows Early Signs of a Swing Low
By Matt Simpson, Market Analyst
Date: 28/06/2026
Overview
The AUD/USD currency pair has experienced its longest weekly losing streak in 17 months. However, various indicators suggest that the bearish momentum may be waning. Despite the Reserve Bank of Australia (RBA) maintaining a tightening bias and the US dollar being well-supported, there are signs from futures positioning, options markets, yield spreads, and technical levels that indicate a potential corrective bounce for the Australian dollar.
Economic Data and RBA Policy
Recent data has supported the RBA's tightening bias, with unemployment rising slightly to 4.4%, while employment increased by 40.3k and household spending showed signs of recovery. The manufacturing PMI improved to 51.2, and the services sector contraction eased to 49.9. Although the RBA acknowledges the need to address inflation, Deputy Governor Andrew Hauser noted the positive impact of lower oil prices due to reduced geopolitical tensions.
Upcoming Economic Events
This week is relatively quiet for Australian economic data, with the focus on the RBA minutes and US economic indicators. The RBA is expected to maintain a hawkish stance but may pause further tightening after three consecutive hikes. Current futures imply a 19% chance of a rate hike at the next meeting, with a nearly 40% probability of a hike by December.
US Dollar Outlook
The US dollar's rally is contingent on strong ISM manufacturing and nonfarm payroll data. As the dollar reaches a 14-month high, the risk of disappointing data increases. If the US dollar's momentum continues to fade, it could provide the Australian dollar with an opportunity to bounce back, especially given the nearby support levels.
Technical Analysis
The correlation between AUD/USD and the US Dollar Index has strengthened, indicating a return of US dollar dominance. The Australian dollar has shown mixed performance against other currencies, with significant support levels nearby. Despite recent bearish trends, the potential for a bounce exists, particularly as the AU-US 2-year yield spread has increased, signaling a possible low for AUD/USD.
Futures Positioning
Short positions against the Australian dollar have risen, but the pace of selling has slowed. This could indicate that the downside risks for AUD/USD are becoming limited. The sentiment in the futures market suggests that traders are not overly concerned about further declines in the Australian dollar.
Conclusion
While the Australian dollar has faced significant bearish pressure, various indicators suggest that the worst may be over. With key support levels in place and a potential shift in market sentiment, traders should remain vigilant for signs of a corrective bounce in AUD/USD.