FOREX: AUD Crosses - AUD Trades Heavy Against The GBP & EUR

The BBDXY range overnight was 1197.92 - 1201.02, Asia is currently trading around 1199. The BBDXY once again found decent supply capping the 1200 area. Price action is interesting though in that the price is not violently moving lower from these bouts of strength as did in the past. The price does look stretched and the market is short so a correction is not out of the question. The larger picture though still remains one of USD weakness and in the current environment rallies should continue to be met with supply, first resistance is back towards the 1205/1215 area, a sustained break above 1220 would be needed to begin challenging the shorts conviction. 

• Bob Elliott on X: “Many of the dynamics that drove the dollar to secular highs are reversing. That doesn't mean a collapse is coming, but instead a likely long-term readjustment that has only just gotten started.”
• Daily Chartbook on X: "The USD-S&P correlation has turned positive ... Positive correlation could be just a temporary reflection of the post-Liberation Day market action ... However, if this trend were to persist, it could be a sign of USD losing its safe-haven characteristics. - Andrea Cicione, TS Lombard". See Graph Below.
• Lance Roberts on X: “There has been a lot of talk about the demise of the dollar, even though it still comprises 58% of foreign reserves. However, one thing that could change that is the rise of stablecoins, where 99% of all stablecoins are pegged to the dollar. If the world goes digital, as expected, the dollar may be the dominant reserve.”

• There is a broad consensus that the USD is set to embark on a decent move lower as the world reduces its exposure to the US and repatriates a lot of these flows. This consensus will also result in some decent short squeezes as a lot of the market is positioned the same way.

  Fig 1: USD - S&P Correlation

  

  Source: MNI/@dailychartbook/TSLombard

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