Snapshot: AUD/USD is trading at 0.7188, up 0.65% on the session, driven by surging energy prices and expectations of further RBA rate hikes. The US-AU 10Y yield spread sits at -65bp, widening slightly in favor of the Aussie as US yields remain relatively contained.
- Watch for resistance around 0.7200, a break of which could trigger further upside.
- The crowded long positioning presents a risk of a sharp correction if the upcoming Australian CPI data disappoints.
Bias into NY: We favor further upside in AUD/USD, targeting 0.7220, supported by the hawkish RBA expectations and continued weakness in the DXY which trades near session lows at 98.14.