Synopsis:

Goldman Sachs advises against selling AUD/USD unless it decisively breaks below the 0.6170/85 region, citing technical levels and market dynamics surrounding the RBA's likely February rate cut.

Key Points:

• Technical Levels:

  • AUD/USD is approaching critical support around the 0.6170/85 region, marking the lows of 2022 and 2024.
  • A clear break below this level is necessary to justify further selling.

• Inflation and Rate Cuts:

  • Trimmed Mean YoY inflation has hit a three-year low, reinforcing expectations of an RBA rate cut in February.
  • The RBA’s February cut is seen as less impactful due to the underwhelming hiking cycle in 2022/23.

• Market Caution:

  • Despite cracks forming in the pair, Goldman suggests waiting for confirmation of downside momentum before initiating short positions.

Conclusion:

Goldman recommends holding off on AUD/USD shorts until a decisive break of the 0.6170/85 region occurs, considering both technical and fundamental factors.