- Risk sentiment remains heavy amid trade, geopolitical pessimism.
- Sluggish data increases expectations of RBA’s another rate cut.
With fewer catalysts to dominate than the global trade pessimism, the AUD/USD pair takes the rounds near 0.6870 during the early Asian session on Monday.
During last week, the Aussie pair couldn’t benefit from China’s upbeat data as higher than expected unemployment rate at home continues to signal another rate cut from the Reserve Bank of Australia (RBA).
Being a commodity-linked currency, the Australian Dollar’s (AUD) buyers were also disappointed to see increasing trade tussle between the US and China dimming prospects of any solution when the leaders of both the countries meet at the sidelines of G20.
Further, rising US Dollar (USD) and pessimism surrounding the global economy backed by the US-China trade tussles and geopolitical tension amid the US and Iran also played their role to drag the Aussie pair downwards.
Global risk barometer, the 10-year yield of the US government bond, slipped to late 2017 lows near 2.08% amid challenges to investor sentiment.
Looking forward, traders can keep emphasizing on the US-China trade developments due to lack of major data/events on hand whereas the momentum of the greenback and global risk could also offer fresh clues to determine near-term moves.
Technical Analysis
A sustained break of 0.6860 becomes pre-requisite for the bears to aim for 2016 lows around 0.6830 and then aim for January month’s flash crash bottom near 0.6730.
On the contrary, an uptick beyond May 30 low of 0.6900 can trigger the pair’s pullback to 0.6940 and 0.6970 numbers to the north.
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