AUD/USD: Bearish backdrop prevails for price to attack below daily pivot as risk-off markets weigh heavy

• AUD/USD has been relatively stable considering the risk-off tone surrounding Sino/US trade.  
• Technicals aligned bearish and price primed for further downside with ATR at 66 pips, (trapped in a tight 28 pip range, so far).  

AUD/USD bears are cautious at this juncture as the dollar stalls in its advance and the Aussie finds solace from robust metal prices, despite the latest angst over global trade risks following White House Adviser Larry Kudlow saying in interview with Fox Business Network that a “sizable distance” remains between the U.S. and China in protracted trade negotiations.  

Kudlow sends markets risk-off

Kudlow explained that previous talks covered “a tremendous amount of ground” but said enforcement would be very important, as well as technological and structural issues.  The news comes as CNBC reported, citing sources, that it is highly unlikely that a meeting betweenTrump and Chinese President Xi Jinping before the March 1 deadline for tariffs to increase on Chinese goods will take place. The markets have wobbled on the headlines with the benchmarks on Wall Street in a sea of red. The DJIA is down 1.25%, S7P 500 -1.21% and the VIX is up 1.77 points, its only significant daily bid since 22nd Jan following the late Dec slide.  

However, despite the negative backdrop, the Aussie is holding up considering the ground the bears have already made due to the RBA’s change of language that recently turned the spotlight on the AUD, distracting markets slightly from the Fed and value of the greenback.  

AUD/USD levels

ATR is in the 60’s and opens space for the downside still with room in daily RSI before the price is oversold. Below the pivot of 0.7100 opens a test of the 24th Jan lows at 0.7075. Below 0.7022/15 October low the 161.8% extension of the retracement brings the price back into line with the start of the year lows and S3 located at 0.6914.  

“Price action In January was exhaustive – the market charted a hammer (reversal). We have a TD perfected setup on the daily chart and a 13 count on the weekly chart. This suggests the down move ended at .6738,”

analysts at Commerzbank explained.