AUD/USD hangs near 2-1/2 month lows, around 0.7100 handle
| • Trade-related headlines prompt some fresh selling since the early European session.
• Risk-off mood benefits USD’s safe-haven status and adds to the downward pressure.
The AUD/USD pair struggled to register any meaningful recovery and remains within striking distance of nearly 31-month lows, around the 0.7100 handle.
The pair's early attempted recovery move, for the second straight session, quickly ran out of steam near the 0.7130 region, with the latest trade-related development exerting some fresh downward pressure since the early European session.
According to the WTO meeting agenda, China has asked for authorization to impose trade sanctions on the US. The news brought the recent hot topic of US-China trade tensions back to the forefront and eventually prompted some fresh selling around the China-proxy Australian Dollar.
Adding to this, a sharp reversal in sentiment around equity markets boosted the US Dollar's safe-haven status and further collaborated towards driving flows away from perceived riskier currencies, including the Australian Dollar.
Meanwhile, a sudden fall in copper prices did little to lend any support or ease the prevalent bearish pressure surrounding the commodity-linked Aussie and stall the pair's decline back closer to the lowest level since late-Feb. 2016.
In absence of any major market moving economic releases, any fresh trade-related news/development might continue to influence market risk sentiment and influence the pair's momentum through Tuesday's trading session.
Technical levels to watch
On a sustained weakness below the 0.7100-0.7090 region, the pair is likely to accelerate the slide towards 0.7045 intermediate support before eventually falling to the key 0.70 psychological mark.
On the upside, the 0.7130 region now seems to have emerged as an immediate barrier, above which a bout of short-covering could lift the pair towards 0.7155-60 supply zone ahead of the 0.7200 handle.
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