Australian Dollar Strengthens Against US Dollar Despite Consumer Confidence Drop

The Australian Dollar has strengthened against the US Dollar on Tuesday, despite a 1.7% month-over-month (MoM) drop in Westpac Consumer Confidence in January to a three-month low of 92.9. This decline follows a sharp 9.0% drop in December, amid shifting rate expectations. Meanwhile, ANZ Job Advertisements declined 0.5% in December, following an upwardly revised 1.5% drop in the prior month.

Household spending increased 1.0% month-on-month in November 2025, easing from a revised 1.4% rise in October, as consumers remained cautious amid elevated interest rates and persistent inflation. Australia’s mixed November Consumer Price Index (CPI) left the Reserve Bank of Australia’s (RBA) policy outlook uncertain. However, RBA Deputy Governor Andrew Hauser stated that the November inflation data was largely as expected and that interest rate cuts are unlikely anytime soon.

US Dollar Struggles Amid Fed Independence Concerns

The US Dollar Index (DXY), which measures the value of the US Dollar against six major currencies, is holding ground and trading around 98.90. Traders await the Consumer Price Index (CPI) data for December, which could offer clues on the Federal Reserve’s (Fed) policy path. The Greenback faced challenges amid dovish Federal Reserve (Fed) expectations, with December’s slower-than-expected US jobs growth suggesting the US central bank could hold interest rates steady later this month.

US Nonfarm Payrolls (NFP) rose by 50,000 in December, falling short of November’s 56,000 (revised from 64,000) and came in weaker than the market expectations of 60,000. However, the Unemployment Rate ticked lower to 4.4% in December from 4.6% in November, while the Average Hourly Earnings climbed to 3.8% YoY in December from 3.6% in the previous reading. Richmond Fed President Tom Barkin described job growth as modest but stable, adding that it remains unclear whether the labor market will tilt toward more hiring or more firing.

Australian Dollar Remains Above 0.6700, Nine-Day EMA

AUD/USD is trading around 0.6710 on Tuesday. Daily chart analysis shows the pair rebounded toward an ascending channel, signaling a renewed bullish bias. The 14-day Relative Strength Index (RSI) at 60.55 remains above the midpoint, supporting upside momentum. The AUD/USD pair could target 0.6766, its highest level since October 2024, with further gains potentially testing the upper boundary of the ascending channel near 0.6860.

The immediate support lies at the nine-day Exponential Moving Average (EMA) of 0.6705, followed by the 50-day EMA at 0.6634. Further losses would open the downside toward 0.6414, the lowest since June 2025. The Australian Dollar was the strongest against the Japanese Yen, according to the table below showing the percentage change of major currencies against each other.

Factors Influencing the Australian Dollar

One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country, another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate, and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.

Reserve Bank of Australia’s Influence on the Australian Dollar

The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low.

Smart Tip for Readers

When monitoring the Australian Dollar’s performance, consider keeping an eye on key economic indicators such as the Consumer Price Index (CPI), interest rates, and trade balances, as these can significantly impact the currency’s value. For more information on the Australian Dollar and its recent performance, visit Here