AUD/USD Current Price: 0.6862
- PM Morrison surprise victory weighs negatively in the Australia-China relationship.
- AUD/USD fell to its lowest since January flash-crash amid trade tensions and dollar's strength.
The Australian dollar remained under selling pressure at the end of the week, amid trade tensions and economic growth concerns, falling against the greenback to 0.6864, its lowest since the early January flash crash. US-Sino tensions reached another zenith following news that China was planning to suspend trade negotiations if the US fails to show "sincerity" in the next round of talks. Meanwhile, the market believes that the RBA is close to cutting the cash rate after keeping it at record lows for almost three years, further denting demand for the AUD in the longer run. Wall Street edged lower Friday after a positive start to the day, also adding pressure on the commodity-linked currency. Australia went to the polls this Saturday, with an unexpected victory of PM Scott Morrison, the leader of the ruling coalition. The news could impact the Aussie negatively, as the ruling party doesn't have a good relation with China. Hopes were that a Labour victory would have improved such relationship, and in fact, polls ahead of the election suggested a victory from the opposition. There are no macroeconomic data scheduled in Australia this Monday.
From a technical point of view, the pair is extremely oversold, yet still bearish in the daily chart, as it has fallen for a fifth consecutive day. In the mentioned chart, the pair is far below bearish moving averages, with the 20 DMA accelerating well above the current level. Technical indicators maintain their sharp downward slopes, despite being in oversold territory. Shorter term, and according to the 4 hours chart, the pair is also headed lower, as a strongly bearish 20 SMA keeps attracting selling interest, while the Momentum indicator lacks directional strength, holding near daily lows, while the RSI resumed its decline, currently at 24. The next relevant support and the possible bearish target is 0.6826 January 2016 monthly low.
Support levels: 0.6860 0.6825 0.6775
Resistance levels: 0.6890 0.6930 0.6965
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