Danske Bank: AUDUSD to trade at 0.66 in 3 months and at 0.65 in 6 months

The AUDUSD pair fell sharply on Thursday, then settled slightly lower than 0.67 on Friday. Analysts at Danske Bank predicted that the pair is likely to keep sliding in the coming months. Thus, AUDUSD may reach 0.66 in three months, and then hit 0.65 in half a year.

The lower-than-expected U.S. inflation data, along with the Fed’s potential monetary easing and the turnaround in COVID-19 policies by the Chinese authorities provided support to the AUDUSD pair.

The Reserve Bank of Australia (RBA) reiterated its interest rate hike of 25 basis points in December. Despite the regulator's statements about further rate rises in 2023, experts anticipated that there is about a 50% chance of suspending the tightening cycle. This is due to a slowdown in the economy and, in particular, the real estate market. 

Analysts believe the U.S. Federal Reserve (Fed) will continue its monetary tightening as early as next year, thereby strengthening the U.S. dollar. New COVID-19 outbreaks in China, on the other hand, continue to put pressure on the country's economy over the winter period. However, a mitigation of anti-COVID requirements may support Australian export prices in the short term. Therefore, analysts maintain a moderately downward outlook profile.