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  • AUD/USD starts the week under pressure on trade concerns.
  • Broad-based dollar weakness helps pair turn positive on the day.

The AUD/USD pair started the week on a negative note and fell to a daily low near 0.7140 as the AUD struggled to find direction amid escalating fears regarding a long-lasting trade conflict with the United States and China. However, with the greenback staying under pressure, the pair retraced its losses and was last seen trading at 0.7177, where it was 0.32% on the day.

Earlier today, in an issued statement, China’s Foreign Ministry announced that they would “undertake the necessary response if the US implements the new tariffs on $ 200 billion worth of Chinese imports.” Although it’s still unclear when the tariffs will go into effect, investors remain cautious.  

On the other hand, after recording robust gains on the back of upbeat data on Friday and coming within a touching distance of the 95 mark, the US Dollar Index failed to extend higher and started retracing last Friday’s losses. At the moment, the index is down 0.35% on the day at 94.63. The data released by the Federal Reserve Bank of New York showed that the business activity in the manufacturing sector in the NY area expanded at a slower-than-expected pace in September with the Empire State Manufacturing Index dropping to 19 from 25.6.  

There won’t be any other macroeconomic data releases in the remainder of the day and the greenback’s market valuation is likely to stay as the sole driver of the pair’s price action.

Technical outlook

The initial resistance for the pair aligns at 0.7230 (Sep. 13 high) ahead of 0.7300 (50-DMA) and 0.7380 (Aug. 21 high). On the downside, supports could be seen at 0.7140 ((sep. 5 low), 0.7090 (Sep. 12 low) and 0.7000 (psychological level).

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