“¢ Fears of global economic slowdown continue to weigh on the antipodean currencies.
“¢ Uncertainty over Fed’s rate hike path in 2019 seemed to help limit deeper losses.
“¢ Broader market risk sentiment might play a key role in influencing the price action.
The AUD/USD pair was seen oscillating in a narrow trading band through the Asian session on Monday and consolidated the previous session’s steep decline to 1-1/2 month lows.
Friday’s softer-than-expected Chinese industrial production and retails sales data revived fears of a slowdown in the world’s largest economy and dampened investors’ appetite for riskier assets.
The global flight to safety lifted the US Dollar to 1-1/2 year tops and turned out to be one of the key factors that prompted some aggressive selling around the China-proxy Australian Dollar.
However, uncertainty over the Fed’s rate hike path in 2019 kept a lid on any further USD appreciation and helped limit further downside, with the pair finding some support near mid-0.7100s.
Recent comments by various Fed officials, including the Fed Chair Jerome Powell, saying that rates were near the policymakers’ estimates of neutral, have been interpreted as dovish by market participants.
Hence, the latest FOMC monetary policy update, scheduled to be announced this Wednesday, will guide the greenback’s near-term trajectory and eventually provide some fresh directional impetus.
In the meantime, broader market risk sentiment is likely to play an important role in influencing the pair’s momentum amid absent relevant market moving economic releases on the first trading day of the week.
Technical levels to watch
The 0.7195-0.7200 region, coinciding with 50-day SMA, now seems to act as an immediate resistance and is closely followed by the 0.7225-30 supply zone. On the flip side, the 0.7150 region might continue to protect the immediate downside, which if broken might turn the pair vulnerable to accelerate the fall towards challenging the 0.7100 handle.
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