The Australian dollar, usually a great barometer of risk, has been in demand this week.
Consequently, AUD/USD broke above a major long-term Fibonacci level, which if sustained would increase the odds for bigger medium-term gains.
Commodity Futures Trading Commission data show that for the week ending July 14, the net AUD position held by speculators flipped from negative to positive for the first time since March 2018.
Refinitiv flow data since July 14 shows FX traders may have added to those AUD/USD longs.
In times of risk appetite, funds usually flow into that currency, meaning positive market expectations.
The Australian dollar hit a multi-month high on Wednesday as surging resource prices and a lurch lower in the U.S. dollar broke major chart barriers nL2N2ET065, sparking a wave of technical buying nL3N2ET0QL.
A weekly close above the 0.7133 Fibonacci level, a 61.8% retracement of the 0.8136 to 0.5510 (2018 to 2020) drop, would add to the underlying bullish market structure and put spot on course to retest the 2019 0.7295 peak.
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