Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

US dollar forecast: AUD/USD, NZD/USD long bets rise, is this a reversal warning?

Retail traders growing increasingly bullish the US dollar and AUD/USD, NZD/USD net-long bets are slowly on the rise.

Source: Bloomberg

The US dollar has been weakening against sentiment-linked currencies, such as the Australian and New Zealand dollars, as of late. However, looking at IG Client Sentiment (IGCS), which is a gauge of retail trader positioning, traders have recently started to increase their bullish bets on the Greenback. This is resulting in increasing AUD/USD and NZD/USD long bets. IGCS tends to function as a contrarian indicator. With that in mind, could we see a turning point for AUD and NZD next?

Australian dollar sentiment outlook – bearish

The IGCS gauge shows that about 33% of retail traders are net-long AUD/USD. Since most investors are biased to the downside, this hints that prices may continue rising. However, downside exposure has decreased by 8.30% and 7.71% compared to yesterday and last week, respectively. With that in mind, the combination of overall and recent changes in positioning are warning that prices may soon reverse lower.

AUD/USD daily chart Source: DailyFX

AUD/USD daily chart

AUD/USD recently closed above the 0.7532 – 0.7556 inflection zone, opening the door to extending gains since late January. Still, prices left behind a large upper wick on April 5th. This can be seen as a sign of indecision. Immediate resistance seems to be the 100% Fibonacci extension at 0.7639. A daily close above this price exposes the 123.6% level at 0.7751 before peaks from May 2021 come into focus. On the downside, keep a close eye on the 20-day Simple Moving Average (SMA) for support. Taking out the latter may open the door to testing rising support from January.

Source: TradingView

New Zealand dollar sentiment outlook – bearish

The IGCS gauge shows that about 54% of retail traders are net-long NZD/USD. Since most investors are now biased to the upside, this suggests that the pair may fall ahead. This is as downside exposure has decreased by 16.09% and 15.44% compared to yesterday and last week, respectively. With that in mind, the combination of overall and recent changes in positioning is offering a stronger bearish contrarian trading bias.

Source: DailyFX

NZD/USD daily chart

The New Zealand dollar also remains in an uptrend since late January. Unlike AUD/USD, NZD/USD has been struggling to find further upside momentum as of late. A large upper shadow was left behind on April 5th, hinting at indecision. Clearing the 61.8% Fibonacci retracement at 0.6955 exposes the 78.6% level at 0.7071 before peaks from October come into focus. Still, a bullish ‘Golden Cross’ remains in play between the 20- and 50-day SMAs, offering an upside bias. Breaking under the 20-day line could open the door to losses, placing the focus on the 0.6859 – 0.6891 inflection zone.

Source: TradingView

IG Client Sentiment Charts and Positioning Data Used from April 5th Report

Follow Daniel Dubrovsky on Twitter @ddubrovskyFX

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. This information Advice given in this article is general in nature and is not intended to influence any person’s decisions about investing or financial products.

The material on this page does not contain a record of IG’s trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.6 points on EUR/USD
  • Analyse market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Tuesday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.