AUD/USD Analysis: recovery short of changing the bearish bias
|AUD/USD Current Price: 0.6923
- US-China trade tensions playing against the commodity-linked currency.
- Aussie recovered on improved mood but RBA's upcoming cut keeping the upside limited.
The AUD/USD pair advanced at the end of the week to close it at 0.6925, not far from a weekly high of 0.6934, a result of broad dollar's weakness and a modest recovery in Wall Street, as US major indexes closed the day with gains, trimming part of their weekly losses. The release of the RBA's latest Minutes mid-week and trade tensions between the US and China hurt Aussie's demand earlier in the week, and will likely keep the bullish potential contained, as Australian policymakers paved the way for a rate cut as soon as next June after almost three years of keeping the cash rate at a record low of 1.5%. As for the US-Sino trade relationship, US President Trump said Friday that he will meet his Chinese counterpart, Xi-Jinping in the next G20 meeting, adding that he was hopeful of getting a trade deal with China "at some point." His words had a short-term positive effect on high-yielding assets, yet a resolution seems still far away.
The AUD/USD pair spent the week consolidating at the lower half of the previous one, having bottomed at 0.6984 for a second consecutive week. In the daily chart, the pair continues trading below a bearish 20 DMA, currently at 0.6960, providing a dynamic resistance, while technical indicators continued recovering from oversold readings, still unable to enter positive ground, which limits chances of a steeper recovery. In the shorter term, and according to the 4 hours chart, the possibility of additional gains is also limited, as the pair is now above the 20 SMA, but below a firmly bearish 100 SMA, while technical indicators hold within positive ground, although with the Momentum flat and the RSI maintaining a positive slope. The bullish case will be firmer on a break above the 0.6965 level.
Support levels: 0.6896 0.6865 0.6825
Resistance levels: 0.6935 0.6965 0.7000
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