That is the word from the marketplace and the reasoning is simple. Many of the big Australian corporate and commodity players took their USD hedges off when the AUD/USD started collapsing late last year. They failed to re-hedge at the lows around .65 cents but were then forced to do so when the market clearly broke back above .80. The reasoning now is that all or most of the required hedging is complete and there will be less fresh buying to hit the market. As the spot price is already considered to be overbought, we should see a pullback to more neutral levels in the high .70’s.
I have been getting my timing wrong on this pair so once again I agree with the reasoning and the analysis, I’m just not sure about the timing. It might be another 500 pips before exhaustion finally sets in for the AUD/USD.
