The Australian dollar started the week extending the trend that it experienced in the previous one. And that trend is to the downside. AUD/USD is trading at 0.7490, under the round level of 0.75. The trough so far has been 0.7478.
The pair last traded at these levels back on January 17th, when it was enjoying an upwards trend. The next level of support is 0.7450, which was a stepping stone on the way up.
AUD/USD downfall – what’s behind the move?
Aussie/USD was drifting downwards on the “risk-off” environment that gripped markets. Stocks are somewhat under pressure and the Japanese yen enjoyed its traditional safe-haven flows. Some of this is related to the US airstrike in Syria as well as political uncertainty in other places. The French elections are two months away and the Trump Administration failed with healthcare.
The last thing that pushed the pair over the line is also US related. The world’s No. 1 economy reported a meager jobs gain of 98K that initially saw the greenback drop. But afterwards it reasserted itself. With a few positives in that report as well as bullish comments from Dudley, the US dollar rallied in the closing hours of the week.
And what about the Australian side of things? The most recent jobs report in Australia was a miss, and so were retail sales. In addition, Chinese PMIs were somewhat soft.
AUD/USD – what’s next?
On the technical level, the breakdown needs to be confirmed. From there, the road is open to 0.7450, 0.7375 and 0.7310. Resistance awaits at 0.7610.
On the fundamental level, the picture is a bit more complicated. Top-tier US data coming out later in the week consists of retail sales and consumer confidence. These could go either way and the mood towards the dollar could also flip. Also, note a speech from Fed Chair Janet Yellen coming out later in the day, at 20:00, as US markets close and as trading commences in the South Pacific.
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