AUD/USD found support near 0.7120 early Monday in Europe and rose towards 0.7180 by mid-afternoon. The move followed a softer US Dollar and a slightly firmer risk tone.
Speculative positioning is stretched, with CFTC data showing net longs near 85K contracts, the highest since early 2013. This creates sensitivity to negative surprises.
Rba Minutes And Rate Path
Tuesday’s RBA Meeting Minutes will be assessed for any shift in inflation language and comfort with the 4.35% cash rate. Markets price about 80% odds of a 25 basis point rise to 4.60% by August, after three hikes this year.
Thursday’s April jobs report is the key domestic release. Forecasts are Employment Change near 20K versus 17.9K previously, unemployment at 4.3%, and participation near 66.8%.
Key levels include support at 0.7120; a break may point to 0.7080. Resistance sits near 0.7200, with the year’s high around 0.7280, while FOMC Minutes come Wednesday.
On the 15-minute chart, AUD/USD was near 0.7170 and above the daily open at 0.7152, with Stochastic RSI overbought. On the daily chart it held above the 50-day EMA at 0.7111 and the 200-day EMA at 0.6844, with Stochastic RSI near 59.
Lessons From May Twenty Twenty Five
The current situation in the Australian Dollar feels very familiar, reminding us of the setup we saw back in May of 2025. Much like last year, the market is pricing in a hawkish Reserve Bank of Australia, with Overnight Index Swaps showing a greater than 70% chance of another rate hike by August 2026. This has pushed the Aussie higher, but it also means good news is already baked into the price.
The biggest risk right now is how crowded this trade has become, creating a dangerous parallel to last year. The latest CFTC data shows speculative net long positions have swelled to over 75,000 contracts, nearing the extreme levels seen in early 2025 that preceded a sharp downturn. When positioning gets this one-sided, the AUD becomes extremely vulnerable to any piece of disappointing news.
We saw this exact scenario play out last year when the bullish story collapsed. Following the crowded positioning in May 2025, a softer-than-expected jobs report provided the excuse for a major squeeze, knocking the currency down several cents in the weeks that followed. That historical precedent serves as a clear warning for anyone chasing the Aussie higher at these levels.
This week’s April 2026 employment data, due out on Thursday, is therefore the key event to watch. With the unemployment rate expected to hold near multi-decade lows of 3.9%, any sign of weakness could trigger a similar long liquidation event as the one from last year. Given how much optimism is priced in, a strong number may only cause a grind higher, while a soft number could cause a rapid drop.
For derivative traders, this setup suggests the risk is skewed to the downside. Buying out-of-the-money puts with a strike below the key 0.6600 support level offers a cheap way to position for a potential squeeze triggered by the jobs report. Fading rallies by selling call spreads above the 0.6700 resistance could also be a prudent strategy to capitalize on the crowded positioning.
