AUD/USD sinks to 0.7440 on China downgrade, weaker copper

The AUD/USD pair is seen extending its retreat from three-week tops of 0.7521, and now looks to test 0.74 handle amid downbeat fundamentals.

AUD/USD down to test 10-DMA at 0.7440

The Aussie remains heavily offered so far this session, as the bears tightened their grip amid reports of a Moody’s downgrade of China’s credit ratings and outlook. Moody’s downgraded China’s long-term local currency and foreign currency issuer ratings to A1 from Aa3 and changed the outlook to Stable from Negative. 

As a result risk-off gripped markets, adding to the negative sentiment around the higher-yield currency AUD. Also, China headlines had a huge negative impact on the metal’s space, with gold down -0.31% to $ 1251, while Copper futures decline -1.30% to $ 2.56/ pound.

Further, worse-than expected Australia’s construction output data for the first quarter also hit the sentiment around the AUD/USD pair. Australia’s Q1 construction work done shows a bigger-than expected drop

All eyes now remain on the FOMC minutes due later in the American afternoon for fresh direction on the spot.

AUD/USD Levels to watch   

At 0.7444, the immediate support is located at 0.7400 (zero figure). Selling pressure is likely to intensify below the last, dragging the Aussie to 0.7385 (May 17 low) and below that 0.7350 (psychological levels). On the flip side, the pair finds the immediate resistance at 0.7463 (5-DMA) above which gains could be extended to the next hurdle located 0.7501 (50-DMA) and 0.7523 (200-DMA).