- The Aussie sees a springback from early Monday’s dip on low trading volumes.
- Broader markets are awaiting signs of easing in political tensions, which continue to keep bulls in chains.
The AUD/USD took a quick trip down to 0.7087 in Monday’s volume-constrained early trading session before recovering back above the 0.7100 handle, and the pair is now trading just shy of 0.7110 as broader markets await further impetus to begin driving orders across the table.
Continued geopolitical tensions, from the US-China trade war to Saudi Arabia’s slaying of a journalist critical of the royal family, to the US’ impending embargo of Iran, are all collecting at the top of the barrel, constraining overall market sentiment and keeping the major FX pairs in a holding pattern as the new trading week gets underway. While the latter half of this trading week sees plenty of US-based action on the cards, the early half sees a thin schedule on the economic calendar and eyes focused on media outlets as investors await evolving details on a wide variety of political factors.
Australia’s domestic economy continues to balance on a knife-edge, with growing unease at potential fallout from the Sino-US trade war, which threatens to continue hampering growth prospects for the Chinese economy. With China being Australia’s largest trading partner, a bearish knockback in Chinese consumption growth represents a significant headwind for the already-wobbly Aussie growth cycle, and Antipodean traders will continue to be risk-averse on China headlines.
AUD/USD levels to watch
The Aussie continues to hang in the balance as markets await inspiration to pick a direction, and as FXStreet’s own Valeria Bednarik: “from a technical point of view, the pair is trading around the 38.2% retracement of its October decline after flirting with the 61.8% retracement of the same slide at the beginning of the week at 0.7160, a key resistance level for the upcoming sessions. In the daily chart, the pair settled below its 20 DMA, also below the larger ones, all of them with strong bearish slopes. Technical indicators have advanced modestly, heading north within neutral levels. Shorter term, and according to the 4 hours chart, the pair offers a neutral-to-bearish stance, as technical indicators hold directionless around their midlines, while the price is a few pips below the 20 and 100 SMA, with the shortest lacking directional strength.”
Support levels: 0.7085 0.7040 0.7000
Resistance levels: 0.7130 0.7160 0.7200
Share
