AUD/USD is lifted on the day by China’s reiteration to bolster its economy
The 0.7000 handle remains a key psychological level for the pair but should the RBA start moving further towards siding with rate cuts and the Fed possibly raising rates in 2H 2019, expect that to be more of an issue for AUD/USD buyers; just like it was when the Fed aggressively hiked rates last year:
The aussie previously pulled back from testing the 0.7000 handle in late December/early January as short positions grew to stretched levels where they tend to reverse, based on CFTC data that is:
However, currently net short positions are at ~41k contracts as of 5 March, so that could indicate some room to maneuver towards the downside to test the 0.7000 handle for sellers should fundamentals work in their favour.
That said, I wouldn’t be too comfortable seeing short positions sitting around current levels too as they are more or less close to being over-stretched in any case. I would chase a solid break under the 0.7000 handle if it does come about eventually, but until then it’s hard to catch a downside move towards 0.7000 when buyers are also looking just as poised to defend the level currently.