• The Australian political drama prompts some aggressive selling around the Aussie.
• Fresh US-China trade tariffs/resurgent USD demand adds to the downward pressure.
The AUD/USD pair maintained its heavily offered tone on Thursday, albeit has managed to recover few pips from fresh weekly lows touched earlier today.
The pair extended overnight retracement slide and came under some intense selling pressure on Thursday amid the latest Australian political turmoil, wherein the country's PM Malcolm Turnbull will face a second leadership challenge on Friday.
This against the backdrop of resignations by three of the senior ministers, who supported Turnbull in a leadership ballot on Tuesday against Dutton, added to the political woes and weighed heavily on the Australian Dollar.
Meanwhile, a goodish pickup in the US Dollar demand, supported by Wednesday's FOMC meeting minutes, supporting prospects for another interest-rate hike in September, further collaborated towards aggravating the selling pressure around the major.
Adding to this, fresh US-China trade tensions made it worse for the China-proxy Australian Dollar and dragged the pair back below the 0.7300 handle. The world's two largest economies escalated their trade war on Thursday with the implementation of 25% tariffs on $16 billion worth of imports from either side.
The selling pressure now seems to have abated, at least for the time being, as market participants now look forward to the Day 1 of the annual Jackson Hole Economic Policy Symposium for fresh directional impetus.
Technical levels to watch
Immediate resistance is pegged near the 0.7315 zone and any subsequent recovery attempt might now be capped at the 0.7345-50 region. On the flip side, the 0.7270 level is likely to act as an immediate support, which if broken might turn the pair vulnerable to accelerate the slide towards 0.7240-35 support area en-route the 0.7200 round figure mark.
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