- The AUD fell yesterday and is trading on the back foot in the Asian session, possibly due to lack of progress in the US-China trade negotiations.
- The outlook as per the daily chart would turn bullish if the spot breaks above the long-term falling trendline.
The AUD/USD snapped the two-day winning streak yesterday and is currently trading at 0.7335 – down 0.10 percent on the day, possibly due to disappointment over progress in trade negotiations between the United States and China.
The dovish Fed expectations and the resulting broad-based USD weakness helped the AUD/USD post a 100-pip gain on Friday. Further, the optimism generated by the US-Mexico trade deal saw the currency pair climb to 0.7326 yesterday.
However, the risk-on rally ran out of steam in the last 24 hours on fears the US and China are unlikely to resolve trade difference anytime soon.
After all, President Trump said that he does not see a quick end to trade tensions with China and Commerce Secretary Wilbur Ross said that the world’s largest economy will resolve issues with China only after it has settled issues with its neighbors.
Technically speaking, the pair left a higher low on the daily chart as it recovered from the low of 0.7238 on Friday, however, the outlook would turn bullish only after the pair has found acceptance above the trendline sloping downwards from the Jan.26 high and June. 6 high.
At press time, the trendline hurdle is located at 0.7380.
Daily chart
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Resistance: 0.7362 (previous day’s high), 0.7373 (50-day MA), 0.7380 (falling trendline hurdle)
Support: 0.7332 (session low), 0.7320 (5-day MA), 0.73 (psychological level)
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