“¢ US-China trade war fears kept a lid on Friday’s goodish up-move.
“¢ Renewed USD buying prompts some fresh selling on Monday.
“¢ Investors eye Tuesday’s RBA decision for fresh directional impetus.
The AUD/USD pair met with some fresh supply at the start of a new trading week and eroded a part of Friday’s goodish up-move.
Late on Friday, the People’s Bank of China raised the reserve requirement on currency forwards to 20%, which coupled with disappointing headline NFP print triggered a modest US Dollar retracement and helped the pair to stage a solid rebound from two-week lows.
The uptick lacked any strong follow-through and remained capped amid escalating US-China trade war fears. Adding to this, the post-NFP USD dip turned out to be short-lived, which further collaborated towards capping any meaningful up-move beyond the 0.7400 handle.
Meanwhile, a combination of diverging forces, ranging from a follow-through USD uptick and positive copper prices, failed to provide any fresh bullish impetus and led to a subdued price action through the Asian session on Monday.
Moreover, investors also seemed to refrain from placing any aggressive bets and preferred to wait on the sidelines ahead of the latest RBA monetary policy decision, due to be announced during the Asian session on Tuesday.
Technical levels to watch
Immediate support is pegged near 0.7375 horizontal zone, below which the pair now seems to slide below mid-0.7300s and head towards testing YTD lows, around the 0.7315-10 region. On the flip side, 0.7410-15 area might continue to act as an immediate hurdle and is followed by 0.7460 supply zone, which if cleared could assist the pair to aim towards reclaiming the key 0.7500 psychological mark.
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