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Feb 07 - 03:48 PM

AUD/USD - COMMENT-AUD/USD Likely To Remain On Unfamiliar Turf

By Christopher Romano  —  Feb 07 - 01:00 PM

AUD/USD shorts remain bold as they tread on territory that has not been seen in nearly 11 years.
They're likely to remain on that turf as, for now, there are few signs that AUD/USD should rally.
Today's upbeat U.S. January employment report nLLA7DEG7Z followed a string of recent data suggesting the U.S. economy remains robust.
U.S. growth contrasts that of Australia's and the RBA's latest SOMP highlighted downside risks to economic growth as GDP forecasts were reduced due to bush fires and coronavirus impact.
The SOMP also said that the RBA is expected to remain accommodative.
The virus impact helps boost AUD/USD shorts' confidence as Asian emerging market currencies and China's yuan, both of which the aussie is highly correlated to, get sold versus the greenback.
The bearish factors drove AUD/USD below 2019's low and the slide extend to levels not seen since March 2009.
Options investors expect AUD/USD's decline to extend as risk reversals AUD1MRR= show that premiums for AUD/USD puts over calls in growing.
Technicals highlight downside risks as well.
The 10-DMA limits rallies while daily and monthly RSIs imply that bearish momentum is intact.
AUD/USD shorts are likely targeting psychological support at 0.6600 followed by 0.6565/70 and 0.6510/25 supports from mid-March 2009.

Refinitiv IFR Research/Market Commentary


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