Citi FX analysts provided insights into the Australian dollar’s performance against various currencies, predicting a challenging path ahead for the AUD.

According to the brokerage firm, the recent sharp decline in the exchange rate indicates a long-term ceiling formed just under ¥110 per Australian dollar last month. They anticipate any rebound to be constrained between the 100-day and 200-day moving averages, currently at ¥100 to ¥102 per Australian dollar.

The analysts also forecast that the AUDJPY pair could dip below its recent low of around ¥90 per Australian dollar next year. For the Australian dollar’s near-term outlook against the US dollar, Citi expects the recovery to peak at USD0.67 to USD0.68 per Australian dollar, with potential to fall to USD0.63 to USD0.64 in a risk-off environment toward the end of the year.

In contrast to its performance against the yen and the US dollar, the Australian dollar is predicted to appreciate against the New Zealand dollar. This outlook is bolstered by the Reserve Bank of New Zealand’s (RBNZ) decision to ease monetary policy, which Citi believes likely marked the bottom for the pair at around NZD1.09 per Australian dollar.

Citi projects that the AUDNZD exchange rate will climb to NZD1.11 to NZD1.12 in the near term. Furthermore, the analysts would not be surprised to see the pair reach the 2022 high of around NZD1.14 per Australian dollar over the next several months.

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