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AUD/USD Analysis: tensions between the US and China weigh on the Aussie
By Valeria Bednarik | September 22, 2019 01:49 GMT
AUD/USD Analysis: tensions between the US and China weigh on the Aussie
AUD/USD Current Price: 0.6765
Trade war concerns returned amid a cancelled visit to US farming states.
Australian preliminary September PMI expected to show economic weakness.
AUD/USD at risk of extending its decline toward sub-0.6700 levels.
The AUD/USD pair settled at 0.6765, ending the week with substantial losses, amid renewed concerns about the US-China trade relationship. The pair edged lower for a third consecutive day on Friday, earlier undermined by speculation the Reserve Bank of Australia will cut rates once again before the year-end. During the weekend, China’s state news agency reported that trade discussions in Washington were “constructive,” and that both teams will discuss the details of the next round of talks, scheduled for October. However, it seems unlikely the headline could pour cold water on the latest peak of risk aversion.
The Australian macroeconomic calendar includes the September preliminary Commonwealth Bank PMI this Monday, with the Services sector seen contracting further and the Manufacturing Index is seen barely holding in expansion territory.
AUD/USD short-term technical outlook
The AUD/USD pair has closed the week below the 23.6% retracement of its July/August decline at 0.6770, after topping around the 50% retracement of the same decline. In the daily chart, the pair is below its 20 DMA after spending most of this September above it, with the indicator now flat. The larger moving averages maintain their strong bearish slopes far above the current level, while technical indicators head south, the Momentum above its 100 line but the RSI currently at 39, all of which supports another leg lower coming. In the shorter term, and according to the 4 hours chart, the pair is technically bearish, now below all of its moving averages and with the 20 SMA crossing below the 100 SMA, while technical indicators maintain their bearish slopes despite being in overbought levels.
Support levels: 0.6735 0.6700 0.6665
Resistance levels: 0.6770 0.6800 0.6840


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