- AUD/USD fell away from the daily bearish wedge’s high, 3-month downtrend, triggered by trade balance miss.
- AUD/USD is being hit on the turn in risk appetite and US stocks markets rolling over.
Last night’s trade balance data sparked the selloff. This reached a surplus of A$ 977 million in April with exports falling 2,0% y/y and imports remaining unchanged. The pair dropped away from the 3-month downtrend and bearish wedge resistance at 0.7680 down to 0.7646 where the pair consolidated ahead of the NY trade.
In NY, AUD/USD has fallen from 0.7650 to 0.7639 before further supply down to 0.7626 when bears took out the 100-hr SMA at 0.7634. The pair is now trading at 0.7620 having just scored a low of 0.7612 for the session so far. The move tracks US equities and AUD/JPY’s lead, (the market’s risk barometer, in the broadest sense, Aussie moves higher alongside equities and risk appetite, while The Japanese yen generally moves in the opposite direction). USD/JPY hit 109.47 the low.
Traders get set for G7/next week’s FOMC and key geopolitical events
Traders are getting set of further rounds of trade war tensions as we move into the final hours of the session before the G7 commences tomorrow, (running over the weekend), and ahead of the FOMC next week where a 25BP rate hike is expected from the Fed. Also, N.Korea is a potential upset for the Aussie, depending on the outcome. However, Trump is already preparing markets for a disappointment and reiterated today that this issue is not a ‘one meeting deal’.
AUD/USD levels
Analysts at Commerzbank explained that AUD/USD has met its initial corrective target and, “between current levels and the 200 day ma at 0.7752, we look for failure and a slide back to the 0.7474 recent low. Below 0.7474 will target the 0.7413 recent low.”
Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart, it broke below the 20 SMA: “While technical indicators lost their upward strength, the Momentum currently heading nowhere around its mid-line while the RSI heads sharply lower at around 48, all of which supports a steeper correction on a clear break of the mentioned Fibonacci support.”
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