- The Aussie’s bullish jump last week came under pessure as trade wars continue to escalate.
- The RBA will be the first major showing for the AUD on Tuesday with today’s calendar decidedly thin.
The Aussie heads into the new trading week near the 0.7150 level after the AUD/USD pair stalled out on a bullish correction last week, backsliding from a peak of 0.7230 as the Greenback continues to lift its head back up in the broader markets.
Trade tensions between the US and China are set to continue dominating the G-10 FX space, with US President Trump set to enact his long-awaited $200 billion tariffs against China, which could throw a serious wrench in the works for US Treasury Secretary Mnuchin, who is trying to get trade talks jump-started with China.
With trade tensions on the rise once again, the Aussie is taking a step down against the US Dollar, and broader market sentiment is expected to continue holding firmly on the risk-averse side, which will see the AUD continue to waffle against the Greenback as traders brace for the final enaction of stiff trade action in the latest round of the US-China trade war.
Monday is a thin showing for Australia on the economic calendar, but Aussie traders will be keeping an eye out for the latest Reserve Bank of Australia (RBA) Meeting Minutes, due early Tuesday.
AUD/USD levels to watch
Bearish fallback is expected to remain the flavour of the week, according to FXStreet’s own Valeria Bednarik: “the AUD/USD pair has retreated sharply after testing the 50% retracement of its latest decline, while also faltered two days in-a-row around a bearish 20 DMA, and now barely holds above the 23.6% retracement of the same slide. Technical indicators in the daily chart have stalled their recoveries from oversold readings well into negative territory now gaining downward traction, leaning the risk toward the downside. In the 4 hours chart, the pair met selling interest around a bearish 100 SMA, and settled a few pips below a bullish 20 SMA, while technical indicators head sharply lower, the RSI already at 46, in line with further slides ahead. The bearish potential will likely increase on a break below 0.7130, a short-term static support level.”
Support levels: 0.7130 0.7095 0.7050
Resistance levels: 0.7175 0.7225 0.7260
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