AUD/USD Price Analysis: Aussie nears former hurdle-turned-support, eyes RBA's Lowe speech


  • AUD/USD retreats toward key support as the US dollar gains on risk-off. 
  • Escalating US-China tensions could keep the greenback better bid. 
  • RBA's Lowe is scheduled to speak at 02:30 GMT. 

AUD/USD is fast closing on key support amid broad-based demand for the US dollar

The currency pair is now just 10 pips short of 0.6552 - the upper end (former resistance-turned-support) of the contracting triangle represented by trendlines connecting April 30 and May 11 highs and May 4 and May 15 lows. 

A close back inside the contracting triangle would invalidate the bullish breakout confirmed on Wednesday. That looks likely at press time, as the futures on the S&P 500 are signaling risk aversion with a 0.4% decline. 

The risk aversion could worsen during the day ahead, further strengthening the demand for the US dollar as the US-China tensions are escalating. President Trump was out on the wires a few minutes ago, accusing China of running a massive disinformation campaign and allowing the coronavirus to spread across the globe. 

Also, repeated warnings from WHO and medical experts that relaxing social distancing measures too early could risk a surge in infections could add to bearish pressures around the Aussie dollar and other risk assets. 

That said, the AUD may find bids if the Reserve Bank of Australia's governor Lowe downplays the need for more stimulus in the near future during this speech at 2:30 GMT. The RBA has already winded things down with respect to bond purchases. 

Daily chart

Trend: Bullish

Technical levels

    1. R3 0.6728
    2. R2 0.6673
    3. R1 0.6635
  1. PP 0.658
    1. S1 0.6542
    2. S2 0.6487
    3. S3 0.6449

 

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