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  • Aussie flatlining after dropping the 0.71 barrier.
  • Early Friday AUD Retail Sales to open for US NFP action to end a thin week.

The AUD/USD is trading down into 0.7075 after slipping from the 0.71 handle in Thursday’s trading, which saw the Aussie resume its downside movement as Pacific-Asia market sentiment remains weak on trade concerns.

Early Friday brings Australian Retail Sales figures at 00:30 GMT, and Aussie bulls are hoping for a 0.2% reading versus the previous period’s 0.0% flatline, though upside momentum for the AUD/USD remains thoroughly strangled after yesterday’s better-than-expected Trade Balance data for Australia failed to generate any meaningful upside moves.

Markets will be edgy in the run-up to Friday’s US Non-Farm Payrolls, where traders are bracing for a potential contraction in wage growth, a heady warning signal for the American economy, and with China off for the entire week in National Day celebrations, Friday’s early Asia session promises a notable lack of trade volume, so traders should exercise caution as the clock winds down to NFP.

AUD/USD levels to watch

Now that sellers have successfully broken down the 0.71 barrier, expect further downside unless broader market sentiment manages to make a full-scale recovery, and as FXStreet’s own Valeria Bednarik noted, “the pair attempted to recover ground but was capped by sellers around the 0.7100 figure, and despite oversold, the risk remains skewed to the downside, given that in the 4 hours chart, the pair extended further below all of its moving averages, with the 20 SMA maintaining an almost vertical slope but some 100 pips above the current level. The Momentum indicator bounced from extreme levels, but its upward strength has already eased, while the RSI maintains its downward slope, now at around 20. The pair could correct higher at the end of the week, should equities recover ground on the back of a strong US employment report, which could bring some relief to equities.”

Support levels: 0.7085 0.7050 0.7010

Resistance levels: 0.7170 0.7200 0.7225