- AUD/USD Price Action: The pair has collapsed from last week's high of 0.7157 to test the 0.6900 psychological floor.
- Silver Meltdown: After hitting a record $121.00 on Thursday, Silver spot prices crashed to $78.675 this morning, marking a 35% decline that has triggered massive margin calls across commodity desks.
- The "Warsh" Factor: President Trump’s selection of Kevin Warsh as the next Fed Chair has re-energized the US Dollar, providing a dual-threat of a stronger Greenback
The most critical driver of the AUD/USD price forecast this Monday is not the RBA, but the absolute carnage in the precious metals complex. Silver’s decline from $121.00 to $78.67 represents one of the most violent de-leveraging events in commodity history, surpassing even the “Hunt Brothers” crash of 1980 in absolute dollar terms.
As a premier “commodity proxy,” the Australian Dollar is being used as a liquidity source. Institutional traders, faced with massive margin calls on their silver and gold positions, are forced to liquidate AUD holdings to cover losses. This “cross-asset contagion” has effectively neutralized the supportive interest rate spread that the Aussie would typically enjoy ahead of an RBA hike.
Silver Crash Dominates the AUD/USD Narrative
The dominant driver for AUD/USD today is the violent repricing in silver. After peaking near $121 per ounce last week, spot silver has plunged to around $78–$80, marking a decline of roughly 35% in just two sessions.
The scale and speed of the move have triggered widespread deleveraging across commodity markets. Margin calls and forced liquidations have spilled into correlated assets, with the Australian dollar acting as a natural outlet for risk reduction due to its strong commodity linkage.
Rather than reflecting a deterioration in Australia’s domestic outlook, the move in AUD/USD appears to be driven by cross-asset liquidity stress, where investors are reducing exposure broadly to meet funding requirements.
The Warsh-Fed Era: A Structural Bid for the Greenback
The secondary catalyst for the AUD/USD price forecast is the “Warsh Factor.” The news that Kevin Warsh, a known advocate for a smaller Fed balance sheet and fiscal discipline, is the primary choice for Fed Chair has shifted the global currency regime.
The US Dollar Index (DXY) has surged to 97.10, its strongest level in months. This move reflects a market that is pricing out “emergency” rate cuts in the US and pricing in a more hawkish, stable Federal Reserve. For the AUD/USD, this creates a “ceiling” at the 0.7050–0.7100 range that will be difficult to breach without a significant cooling of US inflation.
RBA Policy Divergence Still Matters, But Timing Is Key
The RBA remains one of the few major central banks still leaning toward further tightening, with inflation running at 3.4%, above the midpoint of its target range. A rate hike to 3.85% on Tuesday is broadly expected.
However, with expectations already priced in, the currency response will hinge on forward guidance. A clear signal that additional hikes remain on the table could help stabilize AUD/USD. Conversely, any hint that policy tightening is nearing its end may leave the currency exposed while commodity volatility remains elevated.
AUD/USD Technical Analysis: Focus on the 0.6900 Floor
From a technical standpoint, AUD/USD is now testing the 0.6900 psychological support, a level that has repeatedly acted as a pivot over the past year.
- A daily close below 0.6900 would shift focus toward 0.6850, followed by the 200-day moving average near 0.6750.
- On the upside, any RBA-driven rebound is likely to face resistance in the 0.7000–0.7020 zone, where previous breakouts have stalled.
Momentum indicators show that the pair has unwound overbought conditions, but downside pressure remains active while price holds below 0.7000.
Conclusion: All Eyes on Michele Bullock
The AUD/USD price forecast for the next 24 hours hinges on whether the RBA can offer a “Hawkish Anchor” strong enough to stop the bleeding. If Governor Michele Bullock delivers a 25bps hike and signals that further increases are necessary to reach the 2-3% inflation target, the AUD/USD may find the support needed to decouple from the silver crash. However, if the RBA suggests a “pause” is coming, the Aussie could easily slip toward 0.6850 before the week is out.
AUDUSD FAQs
The “Warsh Effect” refers to renewed US dollar strength following expectations that Kevin Warsh could become the next Federal Reserve Chair. His reputation for tighter financial conditions has reduced expectations for aggressive US rate cuts, strengthening the dollar and putting downward pressure on AUD/USD.
The short-term AUD/USD outlook has turned neutral to bearish following the sharp silver sell-off. While higher Australian interest rates still offer long-term support, commodity-driven liquidation and US dollar strength are weighing on the pair in the near term.
The Australian dollar is closely linked to commodity markets. A sharp drop in silver can trigger broader risk aversion and forced selling across commodities, leading investors to reduce exposure to commodity-linked currencies such as the Aussie