“¢ Concerns over US-China trade tensions continue to cap any meaningful up-move.
“¢ A modest pickup in the USD demand exerts some additional downward pressure.
“¢ Traders now look forward to the prelim US GDP growth figures for fresh impetus.
The AUD/USD pair extended overnight retracement slide from weekly tops and remained under some selling pressure for the second consecutive session on Wednesday.
Relief over the US-Mexico bilateral trade agreement was offset by concerns over the lack of progress in US-China trade negotiations and eventually kept a lid on any further up-move for the China-proxy Australian Dollar.
The pair stalled last week’s goodish rebound from the 0.7240-35 support area and once again failed ahead of 50-day SMA, with a modest pickup in the US Dollar demand exerting some additional downward pressure since the US trading session on Tuesday.
The upbeat release of the Conference Board’s consumer confidence index, which jumped to near 18-year highs in August, coupled with a strong rally in the US Treasury bond yields helped ease the recent USD bearish pressure on Tuesday and was seen as one of the key factors weighing on the major.
The pair has now moved on the verge of breaking back below the 0.7300 handle, with weaker copper prices also doing little to lend any support to commodity-linked currencies – like the Aussie.
It would now be interesting to see if the pair is able to find any support at lower levels or the current pull-back marks the resumption of the prior depreciating move as the focus now shifts to the prelim – the second estimate of the US Q2 GDP growth figures, due for release later during the early North-American session.
Technical levels to watch
A follow-through weakness below the 0.7300 handle is likely to accelerate the slide back towards the 0.7240-35 strong horizontal support before the pair eventually aims towards challenging the 0.7200 handle. On the flip side, any meaningful up-move might continue to confront fresh supply near mid-0.7300s, which is closely followed by 50-day SMA barrier near the 0.7375-80 region.
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