AUD/USD stays in the red below 0.80 despite USD weakness
- Copper sell-off weighs on the AUD on Tuesday.
- DXY looks to close the day lower near the 90 handle.
Although the AUD/USD pair was able to retrace a portion of its daily losses in the NA session, it failed to retake the 0.80 handle and was last seen trading at 0.7988, where it was down 28 pips, or 0.35%, on the day.
The commodity-sensitive AUD struggled to find demand on Tuesday amid a sharp fall witnessed in copper prices. "The news that triggered the copper selloff has been a 36,000-tonne surge in LME stocks, perhaps reinforcing the belief that the cathode market is well supplied," Edward Meir of INTL FCStone told Financial Times on Tuesday. The AUD lost nearly 100 pips against its rival NZD during the day. As of writing, the AUD/NZD pair was down 0.6% on the day.
Nonetheless, the pair's losses were limited during the second half of the day as the USD failed to hold on to its modest gains. Weighed by falling US T-bond yields and the disappointing Richmond Fed Manufacturing Index data, the US Dollar Index slumped to its worst level since December 2014 at 89.85. At the moment, the index is consolidating its losses near the 90 mark, looking to close the third day in a row lower.
Technical levels to consider
The pair could extend its gains only with a decisive break above the 0.80 mark. 0.8090 (Sep. 20 high) and 0.8125 (Sep. 8 high) could be seen as the next short-term targets on the upside. On the flip side, supports align at 0.7905/0.7900 (Jan. 15 low/psychological level/20-DMA), 0.7845 (Jan. 12 low) and 0.7775 (200-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.
