How do the economic outlooks for the United States and Australia stack up, and what does it mean for the AUDUSD pair in the long run? Let's break it down.
US GDP: slowing down. The American economy is currently losing momentum. GDP growth is expected to decline from 1.8% in 2025 to 1.4% in 2026, weighed down by tariffs, persistent inflation, and tight monetary policy.
Australian GDP: picking up speed. In contrast, the country's economy is forecast to accelerate from 1.8% in 2025 to 2.2% in 2026, signaling a solid recovery.
US inflation: running hot. The Consumer Price Index (CPI) tends to remain elevated, with core reading potentially exceeding 3% in 2026.
Australian inflation: within comfort zone. The figure is projected to hold firmly within the Reserve Bank's 2% to 3% target range through 2025–2026.
US labor market: cooling off. The labor market may weaken, with unemployment likely to rise to 4.5% in 2026.
Australian labor market: holding strong. Despite some softening, the jobs figure remains robust by historical standards, with unemployment reaching just 4.3% by the end of 2026.
US current account: improving. The ongoing deficit is set to keep narrowing in 2026–2027, signaling better external competitiveness.
Australian current account: widening. The nation's figure may fall to -2.0% in 2026, meaning that this metric is getting worse.
US ratings & risks: downgraded. Long-term fiscal sustainability and growing public debt are key concerns for the nation, which prompted Moody's to downgrade the American credit score in May 2025.
Australian ratings & risks: top-tier. The fact that Fitch and S&P confirmed its AAA score in 2025 shows the country's fiscal policy is stable, even though the public debt is gaining traction.
In general, both nations face headwinds, but Australia's economic and financial prospects seem to be more favorable. The country is on track for accelerating growth, stable inflation, and maintaining a high credit rating. Meanwhile, the US is grappling with a weaker economy, elevated CPI, and lingering fiscal uncertainties.
This fundamental divergence sets the stage for AUDUSD strength in the medium to long run. From a technical standpoint, the pair is currently trading above a key long-term support zone between 0.6350 and 0.6450, reinforcing this positive outlook.
The ultimate recommendation is to go long on the AUDUSD pair. Lock in profits at 0.6900. Place Stop loss at 0.6350.
Calculate your open position so that a potential loss (protected by a Stop Loss order) is limited to 1% of your deposit. If your account balance does not allow entering a position of this size, it is better to skip the trade and wait for other market signals that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
