Some chatter about on the potential for AUD/USD to drop under 0.60

The background to expected further AUD weakness is:

• declining inflation measures published earlier this week, with more CPI data due on January 29 (Q4)
• weak retail sales data
• expectations of an interest rate cut by the Reserve Bank of Australia (RBA) in February (meeting is on the 17th and 18th)
• concerns over U.S. tariffs under Trump
• potential strong U.S. payroll report (boosting the USD)
• China stimulus disappoints

Traders are noting heightened FX option activity (put options with strikes at 0.60 and below, expiring in April, with over a notional billion AUD traded). If 0.6170 breaks demand for similar put options is likely to jump.

• also, leveraged funds have increased their short AUD positions to 37,708 contracts, the most bearish stance since March 2022 (CFTC data).

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Weekly candles:

What do ForexLive traders think? Bear trend getting a bit long in the tooth?

This article was written by Eamonn Sheridan at www.forexlive.com.