AUD/USD: plummeting equities drag the Aussie lower

Valeria Bednarik FXStreet

AUD/USD Current price: 0.7215

Gold and oil under pressure, with the first at fresh yearly lows around 1,185.00 a troy ounce.
Following a positive start to the day, equities turned south, with European indexes piercing previous monthly lows.

The AUD/USD pair bounced from 0.7202, a fresh 2018 low reached this Wednesday. Commodities and equities are under strong selling pressure, with gold prices reaching fresh yearly lows, keeping the Aussie also on the negative side, not far from the mentioned low. Risk aversion returned to the financial world after the Turkish government announced retaliation tariffs on US goods, although the Lira appreciates, as the nation’s banking regulator limited lenders’ swap transactions, a measure with temporal effects, but working for now.

Equities started the day with a modest advance, but turned red, now accelerating their declines, and dragging US futures sharply lower. The Dow Jones Industrial Average is roughly 150 points below Tuesday's close and not far above this month low of 25,117, with a break below this last probably dragging the AUD/USD pair to fresh yearly lows.

Ahead of key US Retail Sales data, the pair is nearing the mentioned low, with short-term sellers now aligned at 0.7235. In the 4 hours chart, technical indicators hold within negative levels, lacking downward momentum amid the pair trading within its previous range, but anyway keeping the risk skewed to the downside. In the mentioned chart, the 20 SMA heads sharply lower above the current level, offering a dynamic resistance around 0.7265, and far below the larger ones. Break below 0.7190 should see the bearish momentum accelerate, with scope then to extend its decline toward the 0.7150/60 region, where the pair has relevant monthly lows from 2016.

Support levels: 0.7190 0.7155 0.7110

Resistance levels: 0.7235 0.7265 0.7300

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.

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