​

The Australian dollar is trading at 0.7434 against the US dollar. This marks a 0.72% decline or a $0.0054 drop in the currency pair. The decline in the AUD/USD pair is evident in the ratio of falling long/short positions. Yesterday, a total of 63% of open positions on the AUD/USD pair were long. By today, that percentage had fallen to 60%.

In terms of actual ratios, that number dropped from 1.67 to 1.49. What is significant about the long/short position ratio is that long positions have declined by 5.4% in 1 day of trading and long positions remain 15.1% lower than the levels seen in the week ending Friday, 25 November 2016. Conversely, short positions are markedly higher (+6.3% over yesterday) and 18.4% higher than the levels as at Friday, 25 November 2016.

The speculative sentiment index (SSI) for the AUD/USD currency pair is an excellent barometer of trader activity. It indicates exactly what the pulse of the market is.

Why is the AUD losing favour against the USD?

As a binary options forex trader, it is important to understand the technical and fundamental factors that are driving currencies higher or lower. With respect to the AUDUSD, there are several reasons why currency traders are bearish:

• There is renewed strength in the greenback and this naturally drives AUD/USD pair lower.
• There is increased nervousness (volatility) about the outcome of the OPEC decision vis-a-vis production caps for Brent crude oil.
• There is increasing concern about US gross domestic product and NFP data news releases.
• The Federal Reserve Bank is close to making a decision on interest rates.

There Are Several Key Levels to Watch with the AUD/USD Pair

For starters, the AUD/USD currency pair has breached the low of 0.7459. Additionally, there is a significant retracement of the AUD against the greenback over the past 5 trading days. The 0.75 level has clearly been breached and this is adding further pressure to the AUD. On 17 November 2016, the AUD/USD pair had a strong resistance level at 0.7505. If it is able to break through this level, the next resistance point will be 0.7543. Following that is the 50-day moving average of 0.7572.

Currently, the AUD/USD pair has broken below the 5-day moving average support level at 0.7449. This is a disturbing downward trend that is taking place. We are seeing strong bearish sentiment with the AUD/USD currency pair and the next level of support will invariably be the 10-day moving average which is at the 0.7405 handle. The currency pair reached a low of 0.7358 on 24 November, and that will likely be another key level to watch.

How Has the AUD/USD Currency Pair Performed in 2016?

For the year-to-date, anaemic gains of 2.41% have been made by the AUD/USD pair. However, over the past 3 months, the pair has shed 1.72%. Over the past 1 month, the AUD has weakened by 1.99%, and over the past 5 trading days the pair is trading even.

The short-term trends for the currency pair are bearish, and much of this is attributed to US dollar strength. The Trump phenomenon has helped the USD to rally. This is evident in the US dollar index which is now at a level of 101.60 – just shy of the 52-week high level of 102.05. The higher the US dollar index level, the stronger the greenback performs against its peers. This has manifested in a weak AUD/USD pair. Day traders will do well to take out short positions on this pair.