AUDUSD Analysis – June 25th-29th Forecast

• The Australian dollar has dropped versus its US counterpart, inline with the broad based USD strength scenario which has prevailed over the past week.
• Last Friday’s CFTC COT report (Commitment of Traders) showed a considerable reduction in net short Australian dollar futures positioning.  There was a jump from -45,459 net short contracts to just -3,458.  The fact that the AUD has subsequently seen major downside (COT data is from the previous Tuesday)  suggests a squeeze on the recent Australian dollar longs could be underway. 
• The AUD/USD is under pressure as speculation that European debt crisis is going to continue to increase borrowing costs in the region which has curbed demand for risk based assets and benefited the USD. 
• The AUD has fallen around 1.7% against its US counterpart this year.
• Price moved as high as the 50% retrace of the last swing higher which is closely aligned with the 1.0226 April 11th 2012 daily low, a prominent swing low which subsequently proved to be resistance when price moved to the upside.
• The AUD/USD currency pair is now trading close to parity and price action in this area could give a hint as to the near term direction.  A strong close below parity would add additional bearish pressure to the pair and could see the 0.9900 area previous resistance highs reached.
•  A close above parity could see a retrace higher with the aforementioned Fib and price structure confluence level at the 1.0200 – 1.0230 zone potentially proving to be resistance once again.