AUD/USD sidelined below 0.6900 handle
|- AUD/USD remains depressed despite the latest US-China trade optimism.
- The prevalent USD selling bias helped limit the downside, at least for now.
The AUD/USD pair was seen oscillating in a narrow trading band through the Asian session on Monday and consolidated the previous session's sharp intraday pullback from 4-1/2 month tops.
The pair failed to capitalize on its early positive move and witnessed a dramatic intraday turnaround on Friday. Uncertainty over the US President Donald Trump's decision to cancel the December 15 tariff-hike on Chinese imports turned out to be one of the key factors that weighed heavily on the China-proxy Australian dollar and led to the pair's slide of around 75 pips from an intraday high level of 0.6938 – the highest since July 26.
The pair remained depressed on the first day of a new trading week and seemed rather unimpressed by the fact that the US Trade Representative Robert Lighthizer on Sunday confirmed that the phase one US-China trade deal is totally done. Bulls even shrugged off mostly better-than-expected Chinese retail sales and industrial production data, which suggested the economy may be stabilizing.
Meanwhile, the prevalent risk-on mood seemed to be one of the key factors lending some support to perceived riskier currencies, including the aussie. This coupled with some renewed weakness surrounding the US dollar, despite a modest pickup in the US Treasury bond yields, might further collaborate towards limiting deeper losses amid absent relevant market moving economic releases from the US.
Hence, it will be prudent to wait for some strong follow-through selling before confirming that the recent positive move might have already run out of the steam and positioning for any further near-term depreciating move.
Technical levels to watch
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