AUD/USD: risk reversals retrace bearis bias, hit one-month high
|- The AUD risk reversals have hit a one-month high in Asia, signaling a drop in demand for the AUD puts (bearish bets).
- The turnaround in the sentiment in the options market indicates the spot will likely break above the long-term falling trendline.
The AUD one-month 25 delta risk reversals rose to -0.75 today - the highest level since July 9, having hit a low of -1.00 on July 20.
The rise from -1.00 to -0.75 indicates a drop in demand or a drop in the implied volatility premium for the AUD puts.
The bearish sentiment in the options market has weakened, which could be an indication the investors are likely expecting a big bullish breakout in the AUD/USD.
At press time, the currency is trading at 0.7445. A break above 0.7452 (resistance of the trendline sloping downwards from the Jan. 26 high and July 6 high) would signal a bear-to-bull trend change and may boost demand for the AUD calls.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.