Synopsis:

ANZ sees a scope for a short squeeze in NZD/USD, as speculative short positions are at an all-time high. With risk sentiment showing signs of recovery, NZD and AUD could see a "catch-up" rally, particularly against the EUR and GBP. If NZD/USD continues advancing, positioning dynamics could accelerate gains as shorts unwind.

Key Points:

1️⃣ NZD/USD Shorts at Record Highs 📉

• CFTC data shows speculative short positions at extreme levels.
• If NZD/USD gains further, forced covering could propel the pair higher.

2️⃣ ANZ Risk Appetite Index Shows Rebounding Sentiment 📊

• Risk appetite is recovering from overly negative levels, last seen in April 2024.
• A risk sentiment rebound typically supports AUD and NZD.

3️⃣ FX Markets in “Catch-Up” Mode for AUD & NZD 🔄

• NZD and AUD could outperform EUR and GBP in the near term.
• A shift in risk sentiment could drive stronger upside momentum.

Conclusion:

ANZ highlights a potential short squeeze in NZD/USD, as record-high short positioning could lead to accelerated gains if the pair moves higher. With risk appetite improving, both NZD and AUD are poised to outperform in the short term, particularly against EUR and GBP.