Your CPU AI-controlled opponents in Squad Battles come from the real squads used by other players in FIFA Ultimate Team (FUT). Specifically, Squads that were used by players when playing Squad Battles, Draft (Online and Offline), FUT Champions, and Division Rivals.
When a set of opponents is provided, either at the start of a new Squad Battles competition or when you perform an Opponent Update, we always provide one Squad from each of our three Squad difficulty buckets: Easy, Medium, and Hard.
Then we select a fourth Squad from either the Easy or Medium buckets, with a 50% chance of the Squad coming from either bucket.
Each Squad in FUT has both a Team Rating value and a Chemistry value. When those values are added together, you end up with an Overall Squad Rating. Each of our difficulty buckets in Squad Battles contains a range of Overall Squad Ratings: