The Aussie on the brink: annual highs under siegeAustralian Dollar FuturesCME_DL:6A1!satelysfxFollowing the bullish impulse initiated at the end of November, the Aussie is now challenging its annual highs. With the latest monetary policy decisions largely digested and implied volatility declining, the market is refocusing on microstructure and flows. Fundamental Analysis The RBA’s latest hold, the third in a row, confirmed a “hawkish hold” bias that continues to support the Australian dollar. The central bank acknowledges that inflation is proving broader than initially expected and remains alert to second-round risks, keeping real rate expectations elevated for Australia. The RBA Rate Tracker, which measures the implied probability of a rate change, is also starting to price in a moderate chance of a hike in 2026. On the US side, while the official message remains cautious, the market has mainly noted the inability of US yields to re-establish a sustained upward trend. This is compounded by a well-established seasonal factor, as December has historically been a period of USD underperformance, driven by hedging flows and profit repatriation. The broader global backdrop is also supportive for the AUD given its strong correlation with commodities, with copper and gold trading at historically high levels. Technical Analysis From a technical standpoint, the daily chart of 6AH6 shows a clear structure of higher lows and higher highs since the November trough. Prices are trading above key moving averages, notably the 55-day average, which is acting as dynamic support. The current consolidation is taking place above former value areas, a typical feature of a market accepting higher prices rather than one in distribution. Volume analysis provides additional insight. Upward phases have been accompanied by rising volumes, while recent pullbacks have occurred on more moderate volume. This suggests an absence of aggressive selling pressure. The visible volume profile on the chart shows a high concentration of trading activity around 0.6550–0.6600, corresponding to a former equilibrium now located below the market. Since the bullish recovery, price has moved into a low-volume area above, indicating that the market is exploring levels with limited historical trading. The current zone around 0.6650–0.6670 appears more like a pause than a definitive resistance. As long as price remains above the core of the volume profile, probabilities favor continuation or, at a minimum, a high-level consolidation. Sentiment Analysis Retail sentiment on spot AUD/USD is particularly skewed, with retail traders heavily net short. Some platforms even show ratios exceeding 80% or 90% short positions. This configuration is typical of market phases where retail participants attempt to anticipate a top based on psychological levels or visible resistance, without waiting for a confirmed reversal signal. From a contrarian perspective, this positioning represents potential fuel for further upside. It indicates that the market is not overloaded with fragile speculative longs, but instead crowded with sellers who may be forced to cover if key levels are broken. On the institutional side, no major desks appear to be arguing for an immediate, structural bearish reversal in AUD/USD. Options Analysis In the options space, calls are more in demand and more expensive, confirming a dominant short-term bullish bias and a market that is primarily expecting extension. The options heatmap also shows large clusters of call options at the 0.6700 and 0.6750 strikes. In the event of an approach to or break above these levels, call sellers could find themselves short gamma and forced to hedge via futures buying, thereby amplifying the bullish move. Trade Idea (6AH6) With a lighter news calendar and market liquidity gradually declining, there is limited likelihood of sufficient catalysts to reverse the trend before year-end. In this context, a directional bullish strategy remains the most coherent, at least over the next two weeks. Entry zone: on pullbacks toward 0.6620–0.6630 Stop loss: below the 55-day average, currently around 0.6540 Primary target: 0.6750 Extended target: 0.6850 in the event of an options-driven squeeze Final Thoughts Even though the AUD has shown some hesitation over the past few sessions, signals continue to converge toward an intact bullish potential. Fundamentals are supportive, technical analysis points to acceptance of higher prices, retail sentiment is heavily contrarian, and options positioning highlights the risk of a squeeze above well-identified levels. In this type of environment, the market’s ability to force weak hands out should not be underestimated, particularly during periods of lower liquidity. As long as the structure remains intact, a bullish extension beyond the annual highs remains the most coherent scenario into year-end, ahead of a likely consolidation phase in early 2026. --- When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: tradingview.com/cme/. This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. General Disclaimer: The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.