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Australian Dollar May be at Brink of Much Larger Reversal

Australian Dollar May be at Brink of Much Larger Reversal

David Rodriguez, Head of Product


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AUDUSD – Retail FX crowds remain net-long the Australian Dollar by a fair margin; they have remained so since May as it traded below $0.8000. Such consistent sentiment has indeed provided us with a steadily bearish contrarian trading bias and to good effect. It is nonetheless worth noting that there has been a significant shift in positions as the AUDUSD bounces off of major lows; short positions have surged 25 percent since last week, while long positions are down 9 percent.

It may very well be that the recent shift marks the start of a more significant Australian Dollar reversal, but we would have to see a much larger change before switching in favor of an AUD-buying bias. And indeed failure at $0.7400 warns that the recent rally may prove short-lived.

See next currency section: NZDUSD - New Zealand Dollar Forecast to Continue Larger Downtrend

--- Written by David Rodriguez, Quantitative Strategist for

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.