AUD/USD – Short squeeze pre-RBA, but sentiment remains negative

  • AUD/USD reached a high of 0.8745 earlier
  • Banks saw demand mostly from leveraged names; short covering ahead of the RBA and trailing stops getting cleared above 0.8720
  • Further gains seem unlikely however, as the market remains cautious ahead of the central bank meeting
  • RBA might be inspired by the RBNZ and use the current market environment to talk the Aussie lower by using more aggressive language in their statement
  • Econ data out of Australia has been rather weak recently; housing market is a worry for the bank, but raising rates too early would negatively impact the economy and is not an option
  • Good intraday support at 0.8680 and then 0.8640

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