AUD/USD continues to soften, pummeled by trade angst

  • Aussie on the decline as risk appetite continues to sour on trade tensions.
  • US CPI readings will be the key data event for Thursday.

The AUD/USD has stepped into 0.7360 following Wednesday's decline, and is heading into the overnight session with a firm bearish bias as the Greenback surges across the board, bolster4ed by renewed trade war fears.

US President Donald Trump is determined to see a trade war with China through to the end, and the US is set to begin imposing further tariffs on China, with another raft of import duties set to be imposed on a further $200 billion USD of Chinese goods within the coming weeks. Last Friday's reciprocal tariffs between the US and China saw neither side willing to back down, and Trump is doubling-down on his efforts to force economic concessions out of the world's second-largest economy. Fears of a ramping up trade war have taken the wind out of bulls' sails, leaving market flows in full reverse as commodities and major equity indexes slump.

Thursday is lined up to be a thin showing for the Aussie on the economic calendar, with Consumer Inflation Expectations for July marked in for 01:00 GMT, which last came in at 4.2%. Inflation has been a vexing datapoint for the Reserve Bank of Australia (RBA), which has resigned itself to a wait-and-see stance, likely for the rest of the calendar year, as economic growth continues to be a lop-sided and sluggish problem for the central bank.

On the USD side, CPI figures will be dropping at 12:30 GMT, and the y/y  core CPI reading for June is forecast to tick up slightly, from the previous reading of 2.2% to 2.3%.

AUD/USD Levels to watch

The Aussie is on pace to mark in new lows for 2018, and as FXStreet's own Valeria Bednarik noted, "the 4 hours chart shows that the pair broke below all of its moving averages, while technical indicators accelerated south, now nearing their oversold readings almost vertically, supporting additional slides ahead toward the yearly low at 0.7310."

Support levels: 0.7340 0.7310 0.7280

Resistance levels: 0.7400 0.7445 0.7490

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