AUD/USD: Heavy below 0.6900 as Libyan headlines renew geopolitical fears

• AUD/USD registers three-day losing streak, seesaws around the lowest in a week.
• Libya’s commander Khalifa Haftar blocked oil exports at ports under his control.
• US-China phase-two deal talks continue, US President Trump’s impeachment trial will begin after Monday’s holiday, nothing major is up on the economic calendar.

AUD/USD remains under pressure while taking rounds to 0.6875 during the initial hours of the Asian session on Monday. That said, the pair has been declining since the last two days amid broad US dollar strength while the weekend news from Libya exerts additional downside pressure on the pair.

Libya regained the market’s attention, for the first time after 2011’s overthrow of Col. Muammar el-Qaddafi. This time it’s a power play between the two sides wherein the one led by renegade military commander Khalifa Haftar blocked the oil-rich country’s exports by 800,000 barrels per day. Germany and Russia will be the key peace brokers as they support the opposite sides. Meanwhile, Berlin held a global leaders’ conference where the United Nations’ (UN) Secretary-General Antonio Guterres has said that major powers are "fully committed" to a peaceful resolution in Libya.

Read: Pompeo sees progress towards ceasefire in Libya at Berlin summit - Reuters

Even so, the tension isn’t ruled out as both the sides from Libyan ruling didn’t meet during the gathering despite being briefed by their respective supporters in the UN, as mentioned by the BBC.

The event negatively affects the global trade sentiment and the weigh on the AUD/USD pair due to its risk-barometer image. The pair had earlier reacted to the broad US dollar strength amid overall upbeat data from the US and a lack of impetus from anywhere else.

Elsewhere, the US-China phase-two trade deal talks are playing the background music with fewer sweeteners whereas the US opposition is in full form to begin President Donald Trump’s impeachment trial from Tuesday. The opposition-led proposal got through the Senate during the last week and might overthrow the Republican leader if found guilty of using his powers in the Ukrainian crisis. It is also important to know that traders mostly ignored the news that the People's Bank of China (PBOC) announced during the weekend that it pumped 200 billion yuan into the financial system in an attempt to maintain liquidity in the banking system before the Spring Festival.

Given the off at the US markets, coupled with no major data from Australia, investors will keep eyes on the trade/political headlines for fresh impulse.

Technical Analysis

An upward sloping trend line since November 29, at 0.6870, offers the immediate key support, a break of which could fetch the quote to 100-day SMA near 0.6845. On the upside, 21-day SMA near 0.6925 can keep challenging the buyers.