AUD Weakening

Retail traders are holding a more than 90% long position in AUDCHF today, making the pair an interesting candidate for short sellers. The pair has been grinding lower over recent weeks and recently broke down to fresh 2023 lows, testing below the prior .6029 lows. Risk sentiment has weakened a little in recent sessions given the fresh focus on hawkish Fed expectations which is leading to softer demand for high beta currencies such as AUD. Meanwhile, CHF has been enjoying stronger demand linked to increased safe-haven inflows. While this narrative remains intact, AUDCHF looks vulnerable to further downside near-term.

Fed & US Data on Watch

Looking ahead today, the latest Fed Beige Book release, as well as further Fed commentary, means that risk flows might well be impacted further. If USD is seen strengthening in response to increased hawkish Fed expectations, this should see AUDCHF moving lower near-term. Keep an eye also on US earnings today with big names such as Morgan Stanley and Tesla due to report which will also be key to determining risk flows.

Technical Views

AUDCHF

The pair has been grinding lower over recent weeks within a well defined bear channel. For now, the downtrend has stalled into support along the .5979 level following the break below the prior 2023 lows at .6029. However, with retail heavily long the pair, the focus remains on a further break lower near-term. Look for a break below the current .5979 lows targeting a move down to the .5912 level support next.