**Australian Dollar Slides as US Dollar Recovers: Eyes on RBA Governor’s Next Move**
*Based on the original reporting by FXStreet’s Balaji Venkateswaran. Additional independent analysis and supporting market context have been included.*
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The foreign exchange markets witnessed notable volatility in early October 2025, as the Australian Dollar (AUD) weakened against its US counterpart. This shift came amid a broader recovery in the US Dollar (USD), and investors are now honing their attention on upcoming commentary from the Reserve Bank of Australia’s (RBA) Governor to gauge the potential direction for monetary policy and the AUD’s performance going forward.
### A Broad Perspective: The AU Dollar in a Global Context
The Australian Dollar has traditionally been regarded as a risk-sensitive currency, reflecting Australia’s exposure to global commodity markets and the broader health of Asian economies. Its fluctuation often mirrors risk sentiment and is intricately linked to key factors such as:
– Movements in commodity prices, especially iron ore and coal
– China’s economic performance, given China is Australia’s largest trading partner
– Global economic sentiment, with the AUD historically functioning as a proxy for broader risk appetite
However, throughout 2024 and into 2025, the AUD has come under persistent pressure, largely reflecting a challenging environment marked by:
– Uncertainty over the trajectory of interest rates in advanced economies
– Divergent growth prospects between the US and other regions
– Periodic softness in demand from China, impacting Australia’s terms of trade
### Immediate Catalyst: US Dollar’s Recovery
The immediate trigger for the AUD’s most recent decline has been the resurgence of the US Dollar. After a period of relative weakness, the USD rebounded on the back of renewed expectations that the Federal Reserve may need to maintain higher interest rates for longer, given stickier-than-expected inflation prints and resilience in US labor market data.
#### Key Factors Encouraging USD Strength
– **Robust US economic data:** Recent releases, including nonfarm payrolls and ISM manufacturing data, have pointed to continued strength in the US labor market and industrial activity.
– **Sticky inflation:** Headline and core CPI figures have remained above the Federal Reserve’s target, suggesting that rate cuts may be more distant than previously anticipated.
– **Safe-haven demand:** Periodic global market jitters, including concerns over geopolitical tensions and uneven global recovery, have bolstered demand for the USD as a safe-haven asset.
The combination of these factors has led to rising US Treasury yields, further supporting the greenback and putting downward pressure on currencies like the AUD.
### The Australian Dollar’s Recent Performance
Following the release of firmer US data and hawkish tones from the Federal Reserve, the AUD/USD pair has come under significant pressure, slipping from earlier 2025 highs toward major support levels observed earlier in the year.
#### Technical Analysis: AUD/USD Short-term Outlook
– **Support and Resistance:** The pair faces immediate support near 0.6350, with
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