**AUD/USD Outlook: Bears Eye 0.64 as Geopolitical Tensions Pressure the Australian Dollar**
*Adapted and expanded upon from the original article by Skerdian Meta, FXLeaders.com (October 18, 2025), with additional research incorporated.*
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### Overview: The Current State of AUD/USD
The Australian dollar (AUD) has come under notable pressure against the US dollar (USD), with the currency pair AUD/USD sliding as bearish momentum intensifies. Ongoing tensions between the US and China, Australia’s largest trading partner, have been a substantial driver of the decline. As the pair nears the psychologically important 0.64 level, traders and investors are closely watching for further developments that could influence market sentiment.
This article explores the underlying reasons behind the Australian dollar’s recent fall, the technical analysis pointing toward possible future movements, and the broader economic and geopolitical context shaping the currency’s outlook.
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### Key Drivers Behind the AUD/USD Decline
#### 1. Escalating US-China Tensions
– Recent developments in the relationship between the United States and China have increased investor caution globally.
– Australia’s close economic ties with China mean that diplomatic or economic friction between the two superpowers can lead to swift and significant consequences for the Australian economy and its currency.
– Ongoing disputes over trade, technology, and geopolitical influence have led to uncertainty about the sustainability of China’s demand for Australian exports—especially in commodities like iron ore, coal, and agricultural products.
#### 2. Impact on Australian Trade
– China remains Australia’s largest trading partner, accounting for roughly one-third of its total exports.
– Diplomatic friction, such as tariffs or import restrictions from China in retaliation to Australia’s positions or alliance with the United States, has historically caused drops in the Australian dollar.
– Weakening Chinese economic activity, compounded by these tensions, reduces expectations for Australian export growth, thereby weakening the AUD.
#### 3. Strengthening US Dollar
– The US dollar has exhibited resilience, supported by robust economic data, high interest rates, and the USD’s traditional role as a safe-haven asset in times of geopolitical uncertainty.
– As risk-off sentiment grows due to global tensions, capital flows tend to favor the safety of the US dollar over risk-sensitive currencies like the AUD.
#### 4. Domestic Economic Factors in Australia
– Australia’s recent economic data has shown mixed signals: while the labor market remains relatively strong, consumer sentiment and business confidence have displayed weakness.
– Inflation continues to be a challenge. The Reserve Bank of Australia (RBA) maintains a cautious stance on further interest rate hikes, especially as the threat of a global slowdown looms larger.
– Lower expectations for aggressive tightening by the RBA contrast with the US Federal Reserve’s persistent hawkishness, adding pressure to the AUD.
#### 5. Commodity Prices and the Australian Dollar
– The Australian dollar is often referred to as a ‘commodity currency’ due to the country’s
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