“¢ US-China trade tensions kept a lid on early attempted up-move.
“¢ Resurgent USD demand/risk-off mood exerts additional pressure.
“¢ Positive copper prices do little to lend any support/stall the downfall.
The AUD/USD pair extended its retracement slide from an intraday high level of 0.7094 and has now eroded a major part of overnight modest recovery gains from 32-month lows.
With traders looking past today’s upbeat NAB Business Confidence index for September, concerns over escalating US-China trade tensions kept a lid on any meaningful up-move for the China-proxy Australian Dollar.
The pair’s early attempted up-move quickly ran out of steam ahead of the 0.7100 handle and was further weighed down by the prevailing strong bullish sentiment surrounding the US Dollar. Despite a modest retracement in the US Treasury bond yields, the greenback managed to preserve strong gains near seven-week tops and kept exerting downward pressure on the major.
This coupled with a fresh wave of global risk-aversion trade, as depicted by a sea of red across equity markets, was further seen benefitting the greenback’s relative safe-haven status against its Australian counterpart and collaborated to the pair’s offered tone for the fifth trading session in the previous six.
Meanwhile, a mildly positive tone around copper prices, which tend to underpin commodity-linked currencies – like the Aussie, did little to lend any support or stall the ongoing slide back closer to over 2-1/2 year lows, around mid-0.7000s touched in the previous session.
In absence of any major market moving economic releases from the US, the USD price dynamics might continue to act as an exclusive driver of the pair’s momentum through Tuesday trading session.
Technical levels to watch
Bulls might try and defend the 0.7040 immediate support, below which the pair is likely to accelerate the fall further towards the key 0.7000 psychological mark. On the flip side, the 0.7075-80 region, closely followed by the 0.7100 handle now seems to act as an immediate strong hurdle, which if cleared might trigger a short-covering bounce towards the 0.7145-50 supply zone.
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