AUD/USD Analysis: little the RBA can do to counter trade war effects

AUD/USD Current Price: 0.6776

• AUD/USD extended its slide for a twelfth consecutive day.
• Dismal data and falling equities kept the pair under pressure.
• AUD/USD could correct higher on a break above the 0.6810 resistance.

The Australian dollar fell against its American rival to 0.6746, a fresh multi-month low and down for a twelfth consecutive day. The devaluation of the Chinese Yuan weighed on the Australian currency alongside with dismal data, as the Chinese Caixin Services PMI came in at 51.6 for July, missing the expected 52.9 and down from the preceding month's reading of 52.00. The Australian AIG Performance of Services Index edged sharply lower in June, resulting in 43.9 from 52.2 previously. The likelihood of a trade deal between the US and China continues to decrease on the latest events, limiting chances of an AUD/USD recovery despite its extreme oversold conditions. This Tuesday, Australia will publish its June Trade Balance, with the country’s surplus seen at 6,000M. The RBA is set to have a monetary policy meeting, although this time, policymakers are expected to maintain rates unchanged. The dovish outlook and chances of further rate hikes would likely remain the same.

AUD/USD short-term technical outlook

The AUD/USD pair attempted a recovery during US trading hours amid prevalent dollar’s weakness, although it met sellers at 0.6782. The risk of additional declines remains high, according to technical readings in the 4 hours chart, as the 20 SMA accelerated its decline above the current level, now nearing at around 0.6810, while technical indicators remain within negative levels, the RSI resuming its decline near oversold readings. Despite no signs of it, the pair could correct higher due to its continued slide, with the risk of an upward move increasing on a break above 0.6810.

Support levels: 0.6750 0.6720 0.6680

Resistance levels: 0.6785 0.6810 0.6845

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