AUD/USD prints 10-day high, value of puts (bear bets) hits 5-week lows

• AUD/USD is trading at a 10-day high of 0.7204 at press time.  
• The value of put options is currently the lowest since Dec. 21.  

AUD/USD is currently trading at the 10-day high of 0.7204 amid renewed dovish Fed expectations.  

The Dow Jones Newswires reported on Friday on that the Fed is considering halting its balance sheet normalization program sooner-than-expected. In response, the greenback took a beating and remains on the defensive at press time. Put simply, Friday’s news report seems to have reinforced expectations that the policy tightening cycle has ended.  

Indeed, the probability of an RBA rate cut has also increased following National Australia Bank’s out-of-cycle mortgage rate hike announcement. As of now, however, markets are focusing on dovish Fed expectations.

The pair, therefore, could rise further if the equity markets, gold, and iron ore futures remain well bid.  

Risk reversals hit 5-week highs

The AUD/USD one-month 25 delta risk reversals are currently trading at -0.85 – the highest level since Dec. 21. Put simply, the implied volatility premium or demand for puts (bearish bets) has hit a five-week low, validating AUD/USD’s rise to ten-day highs.  

The negative number indicates the put value is higher than the value for calls. A put option gives the holder a right but not the obligation to sell the underlying at a particular price on or before a specific date.  

AUD/USD Technical Levels