AUD/USD recovers modestly from daily lows, trades around mid-0.70s
- Dismal Chinese data weigh on the AUD on Thursday.
- Risk-off mood doesn't allow the pair to recover decisively.
- US Dollar Index stays in the negative territory ahead of the data.
The AUD/USD pair came under pressure during the Asian trading hours after the data from China showed that the industrial profits in December declined by 1.8% on a yearly basis to record its first negative reading in three years. Additionally, the weakening appetite for risk also weighed on the AUD and forced the pair to drop to a daily low near 0.7030. However, with the greenback failing to preserve its bullish momentum on Thursday, the pair found support and staged a modest rebound. As of writing, the pair was down 0.25% on the day at 0.7050.
On a positive note, Chinese Commerce Ministry Spokesman Gao told reporters that China and the U.S. were planning to sit down for further trade talks in January and would continue to hold phone calls in the meantime, according to Reuters.
- AUD/USD Forecast 2019: Collateral damage from the US-China trade war.
The US Dollar Index, which closed the previous day above the 97 handle, lost its traction as Treasury bond yields reversed their course following yesterday's strong upsurge. Later in the session, weekly jobless claims and consumer confidence data from the U.S. will be looked upon for fresh impetus. At the moment, the DXY is down 0.25% on the day at 96.75.
Technical levels to consider
The pair could encounter the first initial support at 0.7030 (Dec. 21 low/daily low) ahead of the critical 0.7000 (psychological level) and 0.6930(Jan. 10, 2016, low). On the upside, resistances are located at 0.7075 (daily high), 0.7120 (Dec. 21 high) and 0.7180 (100-DMA).
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
