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4 Feb 2015
AUD/USD : Opportunity to reset shorts?
FXStreet (Bali) - AUD/USD is off over 80 pips from its post-squeeze highs at 0.7850, with Tuesday's RBA rate cut and new adopted easing bias likely to keep the pair quite heavy.
The chances of a further recovery in the Aussie will continue to be directly dependent on the ability of the market to extend the clean-out of USD long positions, rather than any potential AUD strength, with the market pricing in a 57% chance of another rate cut by the RBA in March based on 30-day IB. The removal of 'a period of stability in rates' from the last RBA policy statement, coupled with a more aggressive rhetoric towards the AUD, has raised expectations of further dovish outcomes.
There is a decent possibility that the shorts squeezed yesterday reset short positions on the assumption of a one off 'squeeze set-back' within the context of an ongoing obvious monetary policy divergence between the RBA and the Fed. Technically, offers should be mounting around 0.7830/50 ahead of 0.79, while on the downside, 0.7720/30 is immediate support (29 Jan low) ahead of 0.7630.
The chances of a further recovery in the Aussie will continue to be directly dependent on the ability of the market to extend the clean-out of USD long positions, rather than any potential AUD strength, with the market pricing in a 57% chance of another rate cut by the RBA in March based on 30-day IB. The removal of 'a period of stability in rates' from the last RBA policy statement, coupled with a more aggressive rhetoric towards the AUD, has raised expectations of further dovish outcomes.
There is a decent possibility that the shorts squeezed yesterday reset short positions on the assumption of a one off 'squeeze set-back' within the context of an ongoing obvious monetary policy divergence between the RBA and the Fed. Technically, offers should be mounting around 0.7830/50 ahead of 0.79, while on the downside, 0.7720/30 is immediate support (29 Jan low) ahead of 0.7630.