- US Dollar Index recovers Monday’s losses.
- Negative market sentiment weighs on Aussie.
- Coming up: Westpac Leading Index.
Following a sharp drop in the European morning, the AUD/USD pair steadies around mid-0.72s before coming under a renewed selling pressure in the NA session. The pair, which slumped to a fresh five day low at 0.7232, was last seen trading at 0.7240, losing 0.75% on a daily basis.
Earlier today, People’s Bank of China’s Research Head Xu Zhong said that their latest policy change weighed on the economy. On a similar note, Chinese Finance Ministry official Tan Long stated that the downward pressure on the economy had strengthened on increasing uncertainties. Concerns over the economic slowdown in China caused the AUD to weaken amid Australia’s strong trade ties with China.
Later in the day, the pair extended its decline as the greenback continued to outperform its rivals. With major European currencies struggling to make a decisive recovery vs the buck, the US Dollar Index rose to its highest level of the day at 96.67 to reflect the broad market interest. At the moment, the index is up 0.5% on the day at 96.65.
Today’s data from the U.S. showed that housing starts increased 1.5% in October after falling 5.5% in September and building permits declined 0.6% to match the previous reading. In the early Asian session on Tuesday, the Melbourne Institute will release the Westpac Leading Index.
Technical levels to consider
The pair could face the first support at 0.7220 (100-DMA/20-DMA) ahead of 0.7185 (Nov. 14 low) 0.7160 (Nov. 13 low). On the upside, resistances align at 0.7300 (psychological level/daily high), 0.7340 (Nov. 16 high) and 0.7380 (Aug. 21 high).
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