Australian Dollar/US Dollar Dynamics on 2 February 2026
The Australian dollar (AUD) has experienced a pronounced retreat against the US dollar (USD) early on Monday, 2 February 2026, as market participants absorbed the implications of the United States Federal Reserve’s upcoming leadership change. The AUD fell to a one‑week low of $0.6923, shortly before the currency pair hovered near the critical 0.6905 threshold identified by several analysts.
1. Impact of Kevin Warsh’s Fed Nomination
The catalyst for the recent depreciation is the announcement that Kevin Warsh, former US Treasury Secretary and Federal Reserve Board member, has been nominated by President Donald Trump to become the next Chair of the Federal Reserve. News of the nomination has been interpreted as a positive sign for the USD, sparking a modest rebound in the greenback and contributing to a corresponding decline in the AUD. The Australian dollar’s slide aligns with broader market sentiment that a Warsh appointment may steer US monetary policy toward a more hawkish stance, thereby strengthening the USD.
2. Analyst Forecasts of a Deeper Sell‑Off
UOB Group analysts Quek Ser Leang and Lee Sue Ann have cautioned that the AUD may continue to weaken, potentially falling to 0.6905 before finding support. Their projection is consistent with a broader narrative that the AUD could suffer a “sharp decline” before stabilising. The report, disseminated through FXStreet and BitcoinEthereumNews, underscores the urgency for traders to monitor the pair closely, especially as the USD’s resilience consolidates.
3. Australian Reserve Bank Policy Outlook
While the AUD’s near‑term trajectory is being driven by US policy developments, Australian Reserve Bank (RBA) policy remains a critical backdrop. Market expectations suggest that the RBA will continue to maintain a dovish stance, with the policy rate set at 3.6 %. The RBA’s forward guidance, however, is seen as likely to lag behind the US’s tightening trajectory, widening the policy differential and exerting further downward pressure on the AUD.
4. Global Market Context
Across Asia, equity markets opened with modest gains, yet technology shares faced a downturn that pressured broader indices. The Dow Jones and other world markets displayed mixed reactions, reflecting uncertainty around US policy direction and the potential for a tighter global monetary environment. In China, industrial sentiment remained uneven in January, while South Korea experienced a weak start to February, contributing to a subdued regional market mood.
5. Technical Snapshot
- Closing price (31 Jan 2026): 0.6956
- 52‑week high (28 Jan 2026): 0.7049
- 52‑week low (8 Apr 2025): 0.5923
- Recent low (2 Feb 2026): 0.6923
- Analyst‑predicted trough: 0.6905
Given the 52‑week range, the current level sits just above the mid‑point, yet the pair remains in a defensive stance as the USD continues to gain momentum.
6. Forward Outlook
The immediate outlook for AUD/USD hinges on two converging factors:
- USD Strengthening – Should Warsh’s appointment translate into a tighter monetary stance, the USD is likely to maintain its current uptrend, pressurising the AUD further.
- RBA’s Policy Path – If the RBA refrains from any rate hikes in the coming months, the policy spread will widen, reinforcing the AUD’s downward drift.
Traders should therefore monitor USD‑Fed news releases, RBA announcements, and the evolving technical landscape around the 0.6905 support zone. A sustained move below that level could signal a re‑assessment of risk appetite in the Australian market and prompt a broader review of commodity‑heavy portfolios that include the AUD.
