JPMorgan Seeks Pullback Before Rebuilding Long Positions on AUD/USD

JPMorgan remains bullish on the Australian Dollar (AUD), but not at its current price. The bank's analysts believe that the pair needs to retreat to 0.7080-0.7000 before rebuilding long positions.

The AUD/USD exchange rate is currently trading above JPMorgan's preferred entry level, with a price of 0.720395 (+0.04%). Despite this, the bank's constructive view on the Australian Dollar remains unchanged, supported by expectations for higher interest rates and resilient demand for commodity currencies.

JPMorgan's desk had previously shown reluctance to chase the pair near 0.72, citing a stronger US payroll report as a potential trigger for a pullback in the AUD/USD exchange rate. The bank's analysts now believe that the payroll surprise has shifted attention towards US inflation and Federal Reserve tightening expectations, which could force the AUD/USD back towards JPMorgan's entry levels.

The 48-hour chart shows that the Australian Dollar absorbed the payroll release relatively well, with the AUD/USD briefly dropping below 0.7190 but recovering to close around 0.7204. JPMorgan's analysts believe that a retreat to 0.7080-0.7000 is necessary before rebuilding long positions, and are advising clients to stay constructive while waiting for the market to come to their preferred price.