- AUD/USD fails to extend four-day-old recovery.
- Doubts over US-China trade relations trigger the pair’s pullback.
- Trade/political headlines will dominate the year-end holiday season.
AUD/USD declines to 0.6915 amid early Tuesday. The pair fails to hold onto recovery gains piled since last Wednesday as the absence of Australian traders and downside risk sentiment bore the Bulls.
The week-start trade optimism triggered through the upbeat comments from the US President Donald Trump and China’s tariff relief fail to last long. The reason to blame are headlines from China’s Global Times that signal Beijing’s dislike for the US and raise doubts on any strong trade relationship between the US and China in the future.
The pair benefited from the downbeat performance of the US Durable Goods Orders and New Home Sales released on Monday. However, the market’s measures response to the US-China trade optimism capped the gains of Aussie.
Also supporting the pair’s upside were comments from China’s Premier Li Keqiang that suggested further lowering of Required Reserve Ratio (RRR). China is Australia’s largest customer and hence efforts of monetary easing there help the Aussie currency.
Risk tone stays a bit heavy with the US 10-year treasury yields taking a step back to 1.926% while S&P 500 Futures declining mildly to 3,226.
Traders will struggle for catalyst during the day as Australian markets are closed while the US economic calendar has no major data/event before the Christmas holiday. Even so, trade/political headlines will keep the pair directed during the short-term.
Technical Analysis
Buyers will look for entry beyond the two-month-old rising trend line, near 0.6940, to aim for a multi-month long ascending resistance line near 0.6970 and 0.7000 round-figure. Alternatively, an upward sloping trend line since November 29 limits the pair’s near-term declines around 0.6860.
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