AUD/USD off lows still under pressure below 0.7400

The AUD/USD pair rebounded modestly during the American session, rising around 40 pips from the lows. Earlier it fell to a 1-year low at 0.7346, affected by the escalating trade war between the US and China.

Equity prices around the world dropped and weighed on the Aussie that managed to stabilize on US hours amid an improvement in market sentiment. AUD/USD bounced and climbed to 0.7385. During the last hours remained around 0.7375/85, consolidating losses and headed toward the lowest close since June 2017.

Regarding data Australia will only see the release of the Westpac Leading Index for May, while in the US, more housing data (Existing home sales) is due. The focus will continue on the “trade war” and its impact on risk sentiment.

AUD/USD Technical outlook

“The pair is at risk of falling further, but given the extreme oversold conditions after falling sharply for five consecutive days, an upward corrective movement can't be ruled out. In the 4 hours chart, however, the 20 SMA heads south almost vertically far above the current level, at around 0.7430, while technical indicators have bounced from their lows, although the RSI remains within oversold readings at 25”, said Valeria Bednarik, Chief Analyst at FXStreet.

On the upside, short-term resistance levels might be located at 0.7395, 0.7430 and 0.7480. On the flip side, support could be seen 0.7345, 0.7310 and 0.7275.