Analysts at Credit Agricole expect further short-term strength in the Australian currency and have sharply upgraded their mid-2026 forecast to 0.73 from a previous estimate of 0.67. At the same time, the bank allows for a trend reversal in the second half of the year, when AUD/USD could retreat toward the 0.70 area.
Monetary policy remains the key near-term driver, especially after the Reserve Bank of Australia (RBA) raised interest rates at its February meeting. Markets are pricing in additional RBA tightening over the coming months, while in the United States expectations still include two potential Federal Reserve rate cuts this year. According to Credit Agricole, this divergence in policy expectations should continue to support the Australian dollar in the near term.
At the same time, the bank notes that the rally in the Australian currency is beginning to look stretched, with current levels already exceeding those justified by short-term fundamental factors.
In the second half of 2026, Credit Agricole sees scope for a shift in market expectations. In particular, the RBA may limit itself to just one additional rate hike, while expectations for Fed rate cuts could fade, creating conditions for a correction in AUD/USD.
