- China’s response to Australia’s ban on 5G technology providers weighs on the AUD.
- US Dollar Index remains on track to end the day higher near mid-95s.
After spending the majority of the day moving sideways slightly below the 0.73 mark, the AUD/USD pair came under a renewed bearish pressure at the beginning of the NA session and fell to a fresh weekly low at 0.7248. As of writing, the pair was trading a couple of pips above that level and losing 100 pips, 1.35% on the day.
Earlier on Thursday, Chinese Commerce Ministry said that Australia’s decision to ban Huawei and ZTE from building Australia’s 5G network could affect their bilateral business relations negatively and asked Australia to “act in a fair and open way” to allow Chinese businesses to develop in the country.
On the other hand, regardless of dismal macroeconomic data releases from the United States, the greenback continues to outperform its rivals with the US Dollar Index advancing to a fresh session high at 95.67. At the moment, the index is at 95.62, adding 0.57% on a daily basis.
IHS Markit on Thursday revealed that both the manufacturing and service sector lost momentum in August with PMI readings falling short of market expectations. Moreover, new home sales declined 1.7% in July following June’s 2.4% drop.
Technical outlook
With today’s sharp fall, the RSI indicator on the daily chart turned south below the 50 mark to suggest that the bearish momentum is gathering strength. A decisive breakthrough 0.7250 (Aug. 17 low/daily low) could open the door for further losses toward 0.7200 (psychological level/Aug. 15 low) and 0.7160 (Dec. 23, 2016, low). On the upside, resistances align at 0.7330 (daily high/20-DMA), 0.7375 (50-DMA) and 0.7445 (100-DMA).
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