EUR to AUD Forecast & AUD Currency Pairs Outlook for 2024-2026: A Comprehensive Market Analysis

The Australian Dollar commands significant attention in global forex markets, accounting for approximately 6% of total daily trading volumes. For traders evaluating positions in AUD currency pairs—whether AUD/USD, AUD/JPY, or EUR to AUD conversions—understanding both historical patterns and forward-looking forecasts is essential. This comprehensive guide examines what drives the AUD and what market participants should anticipate through 2026.

Understanding the AUD’s Two-Decade Performance Arc

The Australian Dollar’s journey over the past 20 years reveals a currency shaped by commodity cycles, interest rate differentials, and global economic shocks.

The Boom Period (2004-2011)

From 2004 through 2008, the AUD rallied robustly, reaching 97 index points—its highest level since 1983. The Global Financial Crisis brought brutal volatility: the currency collapsed approximately 35% from its June 2008 peak to October’s 62-point trough. However, what followed was remarkable: a 77.6% recovery that culminated in July 2011’s historic 110-point peak. This recovery was fueled primarily by Australia’s mining boom, as surging demand from China and other Asian economies lifted commodity prices and the AUD alongside them.

The Long Decline (2013-2020)

Since mid-2013, the AUD entered a protracted depreciation phase. China’s economic slowdown in 2015 accelerated this decline, with the AUD reaching just 68 points by January 2016. Two factors converged: Australia’s terms of trade deteriorated, and the interest rate gap narrowed as the Reserve Bank of Australia eased policy while rates elsewhere remained elevated. The 2020 COVID-19 pandemic triggered a sharp drop to 58 points in March, though the currency recovered to 78 by February 2021.

Recent Consolidation (2021-Present)

Inflationary pressures and divergent central bank policies have kept the AUD under pressure. As of September 2024, the currency trades at 68 index points, caught between commodity-related support and interest rate headwinds.

Why Trade AUD Currency Pairs? Weighing the Case

Strengths Supporting AUD Trading

The Australian Dollar offers several compelling characteristics for forex participants:

• Exceptional Liquidity: As one of the world’s most actively traded currencies, AUD pairs offer tight spreads and efficient execution, translating to lower transaction costs.
• Resource Economy Leverage: Australia’s abundance of iron ore, coal, and gold means the AUD serves as a proxy for commodity exposure. Traders skilled at forecasting commodity cycles can find recurring trading opportunities.
• Macroeconomic Stability: Australia maintains sound fiscal management, a well-regulated financial system, and manageable public debt levels. Positive GDP releases, employment data, and inflation reports tend to support the AUD.
• Interest Rate Arbitrage: The Reserve Bank of Australia’s rate decisions create interest rate differentials that traders exploit through carry trade strategies, borrowing in low-rate currencies to invest in higher-yielding AUD assets.
• Asian Trade Exposure: Strong ties to China and other Asian economies mean positive developments in these regions often boost demand for Australian exports and support the AUD.

Headwinds and Risks

However, structural challenges present meaningful trading risks:

• Commodity Dependency: Australia’s export-heavy economy makes the AUD highly sensitive to commodity price swings. Iron ore weakness particularly impacts currency strength.
• Geopolitical Sensitivity: Trade tensions, regional conflicts, and shifts in risk appetite create volatility. The AUD tends to weaken during periods of heightened geopolitical uncertainty.
• Monetary Policy Divergence: Changes in the RBA’s stance—whether rate cuts or hikes—can quickly shift currency flows. Misalignment with US Federal Reserve or other central bank policies introduces timing risks.
• External Vulnerability: Natural disasters, pandemics, and global economic shocks disrupt trade patterns and investment, affecting AUD valuation.

Navigating the Major AUD Currency Pairs: Historical Performance 2022-2024

AUD/USD: The Core Benchmark

The AUD/USD pair opened 2022 near 0.72, then weakened substantially as the Federal Reserve’s aggressive 2022 rate-hiking campaign outpaced RBA increases. The pair bottomed at 0.61 in October before ending the year at 0.68. In 2023, despite the RBA holding at 4.35%, the Fed maintained rates at 5.25%-5.5%, and China’s weak post-pandemic recovery and July deflation pressured the AUD lower. The pair traded down to 0.61 again by October before recovering to finish at 0.68. Through September 2024, AUD/USD has ranged between 0.64 and 0.68, reflecting narrow trading ranges and indecision.

AUD/JPY: Japanese Interest Rate Divergence

The AUD/JPY pair tells a story of interest rate policy divergence. In 2022, the pair surged 14.4% to 95 by April, then consolidated between 91-95, ending the year at 88. Australia raised rates throughout 2022 while Japan maintained negative rates. In 2023, modest gains carried AUD/JPY to 97 by June, with minimal movement thereafter, closing at 96. In 2024, the pair climbed to 108 by May (a 6.72% gain), but retreated to 97 by September as Japan’s technical recession and below-trend growth surprised markets. Notably, even Japan’s March 2024 move to end negative rates and raise to 0-0.1% provided limited yen support, suggesting deeper structural weakness.

EUR/AUD: The European Relative View

The EUR/AUD pair started 2022 at 1.5588 before plummeting 7% to 1.437 from February-April, as the Russia-Ukraine conflict and resulting energy crisis weighed on Europe. Recovery carried it to 1.52 by June, followed by renewed weakness to 1.42 by August. European rate hikes from September onward stabilized the pair at 1.57 year-end. In 2023, EUR/AUD climbed from 1.56 to 1.67 by late April, then oscillated lower to 1.59 before resuming to 1.69 by September, finishing at 1.62. Through September 2024, the EUR/AUD has remained stable within a narrow 1.62-1.63 band, reflecting minimal policy divergence between the ECB and RBA.

Forecast Scenarios for AUD Pairs: 2024-2026

Major financial institutions publish varying outlooks for AUD currency pairs. While consensus never emerges, the following forecasts provide a reasonable framework:

AUD/USD Outlook

The range reflects fundamental uncertainty. NAB’s constructive 2025-2026 view (0.75-0.78) assumes RBA rate cuts moderate while the Fed cuts faster. Long Forecast’s bearish 2026 call suggests renewed AUD weakness. CoinCodex’s 0.50-0.60 range for 2026 represents an extreme bear case.

AUD/JPY Outlook

NAB expects AUD/JPY to grind lower, reflecting eventual yen stabilization as Japan’s policy normalizes. Conversely, Long Forecast and CoinCodex project substantial upside, assuming Japan’s rate environment remains accommodative relative to Australia’s.

EUR to AUD Forecast

The euro to AUD forecast split reflects divergent views on ECB policy persistence. NAB’s declining outlook assumes EUR weakness relative to AUD, while Long Forecast and CoinCodex see the euro gaining ground, potentially on stronger eurozone relative growth or softer Australian conditions.

What Drives AUD Movement? The Variables That Matter

Currency forecasting requires monitoring specific economic drivers:

Monetary Policy Divergence: Interest rate differentials between the RBA and major central banks (Fed, ECB, Bank of Japan) remain the primary driver. When the RBA raises while others hold or cut, the AUD attracts inflows. The reverse creates selling pressure.

Commodity Prices: Iron ore, coal, and gold prices correlate directly with AUD strength. A sustained commodity bull market provides structural support; extended bear markets pose persistent headwinds.

China’s Economic Performance: As Australia’s largest trading partner, Chinese growth directly affects demand for Australian exports. Any slowdown in China rapidly weakens the AUD.

Global Risk Sentiment: During risk-off periods, the AUD—as a higher-yielding currency tied to cyclical commodity demand—sells off. Risk-on environments favor AUD appreciation.

Geopolitical Events: Trade wars, regional conflicts, and policy uncertainty create sudden shocks. The ongoing US-China trade tensions and potential tariff escalation could impact AUD positioning.

Practical Approach: From Analysis to Trading Action

For traders considering AUD currency pairs:

1. Define Your Thesis: Determine whether you’re bullish (expecting AUD strength via RBA hold/commodity recovery) or bearish (expecting RBA cuts/China weakness). Your conviction level should match position sizing.

2. Choose Your Pair:

• AUD/USD offers maximum liquidity and tracks Fed-RBA divergence
• AUD/JPY captures interest rate arbitrage with Japan’s low-rate environment
• EUR to AUD provides a European macro perspective on Australian currency strength

3. Set Risk Limits: Establish stop-loss levels based on technical support/resistance, not arbitrary percentages. Size positions so a stop-loss execution doesn’t exceed your risk tolerance.

4. Monitor Economic Calendars: Track RBA decisions, Australian employment/inflation reports, Fed communications, and Chinese PMI data. These drive short-term volatility and medium-term trends.

5. Combine Analysis Approaches: Use technical analysis to identify entry points and trend strength, but frame decisions within fundamental conditions (interest rate policy, commodity trends, geopolitical backdrop). Neither approach alone suffices.

6. Diversify Across Pairs: Rather than concentrating on AUD/USD alone, maintaining positions across AUD/JPY and EUR/AUD distributes exposure to different macro drivers, reducing single-pair concentration risk.

Key Takeaways

The Australian Dollar remains a compelling forex instrument for traders willing to understand its drivers. Historical analysis shows the AUD responds predictably to commodity cycles, interest rate differentials, and Chinese economic health. Looking ahead to 2024-2026, forecasts diverge sharply—from NAB’s relatively constructive 0.75-0.78 AUD/USD call to CoinCodex’s bearish 0.50-0.60 scenario. This spread reflects genuine uncertainty about future central bank paths, commodity trajectories, and geopolitical developments.

Whether deploying capital in AUD/USD, tracking interest rate arbitrage through AUD/JPY, or monitoring the euro to AUD forecast, success requires staying disciplined about risk management, remaining flexible about position adjustments, and maintaining continuous awareness of macroeconomic shifts. The coming three years will likely see elevated volatility; traders prepared with clear theses and defined risk controls stand the best chance of capitalizing on opportunities while limiting drawdowns. In a dynamic global environment, the Australian Dollar—tied to commodity cycles, Asia’s growth, and yield differentials—deserves a place in the serious trader’s analytical toolkit.