Australian US Dollar Forecast: "Grinding Rally" in AUD/USD to 0.66 by 2026

May 5, 2025 - Written by Tim Boyer

STORY LINK Australian US Dollar Forecast: "Grinding Rally" in AUD/USD to 0.66 by 2026

The Australian dollar has posted net gains on Monday with the Australian dollar to US dollar (AUD/USD) exchange rate posting 5-month highs just below the 0.65 level before settling around 0.6470.

The Pound to Australian dollar (GBP/AUD) exchange rate dipped to 1-month lows around 2.0525.

The government election victory helped underpin the local currency with wider US dollar losses also an important element amid another surge in the Taiwan dollar and wider Asian currency gains.

NAB has revised its end-2025 AUD/USD forecast to 0.70 due in part to US dollar weakness.

The Australian Labour Party under Prime Minister Albanese has won the Australian General Election. Although 16 seats have still not been declared, the party has already won 85 seats, above the 76 needed to secure an overall majority.

The Labour Party secured a significant swing in its favour as the opposition National/Liberal coalition posted sharp losses and leader Dutton resigned after losing his seat.

Albanese was the first Prime Minister to secure a second successive term for 20 years.


In a media briefing, Albanese commented; "I had a warm and positive conversation with President Trump and I thank him for his very warm message of congratulations."

There were hopes of constructive bilateral talks between the two sides.

He added; "We talked about how AUKUS and tariffs will continue to engage, we will engage with each other on a face-to-face basis at some time in the future. And I thank him for reaching out in such a positive way.”

Wider trade developments will also be a key element for the currency.

Credit Agricole commented; “With trade deals potentially being signed with other Asian countries this is all good news for Australia, which relies heavily on trade with Asia.”

It added; “We note, however, that if US President Donald Trump’s trade war were to narrow down to a repeat of his first time and focus more on China, this would hold the AUD’s rally back.”

NAB chief economist Sally Auld commented noted the strong mandate, but added; "However, we expect the government's agenda to proceed largely as it has in the first term; that is, relatively cautiously and adhering to a 'no surprises' policy."


The Australian dollar may be hampered by expectations of a Reserve Bank of Australian rate cut from 4.10% on May 20th.

Credit Agricole expects a near-term rate cut, but added; We continue to forecast a grinding rally in AUD/USD to 0.66 by year-end as investor sentiment about global growth improves and the RBA’s rate cutting cycle turns out to be shallower than the market forecasts.

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TAGS: Australian Dollar Forecasts