“¢ The recent escalation of US-China trade tensions kept exerting downward pressure.
“¢ A sharp fall in copper prices further dent sentiment and add to the selling bias.
“¢ A subdued USD price action, despite surging US bond yields, helped limit downside.
The AUD/USD pair has managed to recover around 15-pips from Asian session low, albeit seemed struggling to gain any meaningful traction.
The pair extended Friday’s rejection slide from 50-day SMA hurdle near the 0.7300 handle and lost some more ground during the Asian session on Tuesday. A combination of negative forces kept exerting some downward pressure for the third consecutive session and dragged the pair to a four-day low level of 0.7236.
The recent escalation of US-China trade tensions was seen as one of the key factors weighing on the China-proxy Australian Dollar. Adding to this, a sharp fall in copper prices further collaborated towards denting sentiment around commodity-linked currencies – like the Aussie.
The downside, however, remained cushioned amid a subdued US Dollar price-action. Despite a strong follow-through upsurge in the US Treasury bond yields, the greenback failed to build on its overnight recovery move and helped limit any deeper losses, at least for the time being.
Moving ahead, traders now look forward to the US economic docket, highlighting the release of Conference Board’s consumer confidence index in order to grab some short-term opportunities. The key focus, however, will be on the highly anticipated FOMC decision, scheduled to be announced on Wednesday.
Technical levels to watch
The 0.7235 area now becomes an immediate support to defend, which if broken is likely to accelerate the fall further towards the 0.7200 handle. On the flip side, momentum beyond 0.7265 level might now assist the pair to make a fresh attempt towards conquering the 0.7300 handle (50-DMA).
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