- AUD/USD sees a sharp sell-off on renewed China growth concerns.
- US dollar gathers upside traction as risk-off remains at full steam.
- Multiple rejection at 200 DMA spells trouble for the aussie ahead of RBA/ Fed minutes.
AUD/USD is falling hard towards 0.7050, as the selling interest around the aussie dollar remains unabated amid resurfacing concerns over China’s economic recovery.
Disappointing Chinese acitivity numbers for July raised alarm that the post-pandemic economic recovery is weakness in the workd’s second-largest economy. This has rattled market sentiment while weighing heavily on the Chinese proxy, as well as, the higher-yielding AUD.
Additionally, tensions are building up between Washington and Beijing after a US delegation arrived in Taiwan, especially after the contentious visit by House Speaker Nancy Pelosi. The US-China geopolitical risks are also rendering AUD-negative. Commenting on a US congressional delegation’s visit to Taiwan, China Global Television Network (CGTN) expert Han Peng said, Beijing may tighten its military blockade of Taiwan and economic sanctions on the island.
The US dollar emerges the sole winner amid the risk-off scenarion, extending Friday’s rebound towards 106.00 against its major peers. Attention turns towards Tuesday’s RBA minutes and FOMC minutes due to be published on Wednesday for fresh trading opportunities in the pair.
From a short-term technical perspective, the daily structure appears interesting, as the price has run into the critical horizontal 200-Daily Moving Average (DMA) at 0.7121 for the third trading day in a row.
This has spelled trouble for AUD bulls, prompting a pullback towards the 0.7050 psychological support. The next key downside target aligns at 0.7000, the round figure.
Although bulls still remain hopeful as the 21 DMA has crossed the 100 DMA for the upside, flashing a bulish signal.
The 14-day Relative Strength Index (RSI) has turned south but remains well above the midline, suggesting that the sell-off could be seen as a good buying opportunity.
If bulls manage to defend 0.7050, then a rebound towards 0.7100 will be in the offing, The 200 DMA barrier will be back on buyers’ radars on a renewed upside.
AUD/USD: Daily chart
AUD/USD: Additional levels to consider
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold climbs above $2,340 following earlier drop
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.