AUD/USD Analysis: intensified trade tensions to keep hurting the Aussie

Valeria Bednarik FXStreet

AUD/USD Current Price: 0.6754

Aussie weighed by tumbling equities, little room to advance.
US President spokeswoman said that Trump “only regrets” not raising tariffs even more.
AUD/USD technically bearish, break below 0.6735 required to confirm a bearish extension.

The AUD/USD pair closed the week with modest losses at around 0.6750, posting a limited reaction to Friday’s headlines. Trade tensions intensified after, first China and later the US, announced new tariffs to imports to each other, while US President Trump menaced to declare a national emergency and make US companies leave China. In one hand, the dollar plummeted with the headline, but also equities, which usually weighs on the Aussie, leaving the pair trapped between a rock and a hard place. Nevertheless and considering that China is the Australian biggest trade partner, the risk for the pair is skewed to the downside.

Over the weekend, Trump said that he was having “second thoughts” on escalating the trade war with China, although his spokeswoman later clarified that he regretted not raising tariffs even more, which means that risk-off will likely dominate Monday trading. Also, RBA’s Governor Lowe spoke within the G-7 meeting, saying that “central banks have a limited and partly exhausted arsenal of tools to fight back” economic shocks, a negative headline for the commodity-linked currency. There are no macroeconomic releases scheduled in the country.

AUD/USD short-term technical outlook

The daily chart for the AUD/USD pair shows that it continues meeting sellers around a bearish 20 DMA, currently at 0.6790, which accelerated its decline far below the larger ones. The fact that the pair bounced from 0.6735 level for a second time this month helped the Momentum indicator correct higher, but does not mean the pair could recover further, particularly considering the RSI remains flat at around 37. In the 4 hours chart, the pair offers a neutral-to-bearish technical stance, as indicators remain within negative levels while the pair was again rejected by a bearish 100 SMA, also below the 20 SMA.

Support levels: 0.6735 0.6700 0.6675

Resistance levels: 0.6790 0.6820 0.6860

View Live Chart for the AUD/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

EUR/USD remains bid, focus stays on 1.1900

EUR/USD has broken its two-day run of losses and is ticking modestly higher on Thursday, hovering around the 1.1880 area as the US Dollar struggles to find clear direction. Weekly Initial Jobless Claims rose more than expected, taking a bit of shine off the Greenback, but markets are largely in wait-and-see mode ahead of Friday’s US CPI release.

GBP/USD sticks to the bid bias, still below 1.3700

GBP/USD is trading with decent gains around 1.3650 on Thursday. Indeed, Cable is attempting to shake off the weakness seen earlier in the week amid another choppy session for the Greenback, while a run of disappointing UK data has so far failed to derail the pair’s tentative recovery.

Gold recedes slightly, trades below $5,100

Gold remains stuck in choppy trade on Thursday, deflating marginally just below the $5,100 mark per troy ounce as the US Dollar drifts without a clear trend. Softer US Treasury yields across the curve are offering some support, but with markets treading carefully ahead of Friday’s US CPI release, conviction remains limited and price action continues to look hesitant.