- US Dollar Index clings to daily gains above 96.30.
- Dismal market sentiment weighs on risk-sensitive currencies.
- Existing home sales data coming up next from the U.S.
After staying relatively quiet on Monday, the AUD/USD pair came under a bearish pressure on Tuesday and slumped to its weakest level in 13 days at 0.7120. As of writing, the pair was down 0.4% on the day at 0.7130.
Yesterday’s disappointing GDP data from China confirmed the economic slowdown in the worlds second-largest economy and hurt the market sentiment. Although the thin trading conditions amid the holiday in the U.S. didn’t allow for sharp movements, major global equity indexes extended their losses on Tuesday and risk-sensitive currencies such as the AUD struggled to find demand.
On the other hand, the greenback took advantage of the dismal market mood and gathered strength against its major rivals with the US Dollar Index pushing higher toward the mid-96 area before going into a consolidation phase ahead of the existing home sales data from the United States. Moreover, markets will be paying close attention to fresh developments surrounding the government shutdown in the U.S.
Earlier today, several news outlets reported that Democrats would reject the legislation President Trump is expected to call later today and force the government to remain shut down. Concerns over the potential negative impact of this stalemate on the economy could cause the risk-off mood to continue to dominate the market action in the second half of the day.
Key technical levels
The initial support for the pair aligns at 0.7100 (psychological level) ahead of 0.7035 (Dec. 21, 2018, low) and 0.7000 (psychological level). On the upside, resistances are located at 0.7140 (20-DMA), 0.7170 (50-DMA) and 0.7220 (Jan. 17, high).
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