AUD/USD: test the commitments of the Aussie bulls, AUD/JPY weighs
- AUD/USD: testing the bull's commitments at 0.7700, fresh lows.
- AUD/USD: dragged by AUD/JPY risk-off flows.
AUD/USD is currently trading at 0.7703, extending the downside and making fresh lows as Tokyo gets going on a risk-off tone with plenty of angst over geopolitical tensions and an unfavourable environment for the commodity bloc. AUD/JPY skidded to test 81.50 and that is weighing on AUD/USD that has so far made a low of 0.7701 from a high of 0.7720.
Trade wars have been on the lips of observers in recent sessions and tensions continue to build with weekend news where the EU has laid out their retaliation for when Trump's administration actions the proposed tariffs.
Trump, trade wars, dollar and US yields - Westpac
The Politico reported that the EU published two lists with American products to be affected. More here:
- The Commission needed to act now to make sure it notified the lists to the WTO within a 90-day deadline.
- A senior European official said the EU's response list was for "stakeholder consultations" and added that the total value of American exports targeted could reach "€6.4 billion all added together."
- The decision whether to use the lists would be taken only after three months.
What events are key this week?
As far as events go, its pretty dead out there for now, but tomorrow we have the RBA minutes and on Thursday, the Aussie jobs will be key after the FOMC meeting and announcements the day before where markets expect a further rate hike.
AUD/USD levels
Valeria Bednarik, chief analyst at FXStreet explained that the technical indicators in the mentioned chart entered bearish territory with the RSI heading firmly south around 35, as the pair broke below all of its moving averages, all of which favors additional declines as long as the price holds below the 0.7740 level:
"Shorter term, and according to the 4 hours chart, the pair is also biased lower, as technical indicators barely pared their declines within oversold territory, while the pair settled far below its moving averages, with the 20 SMA heading south almost vertically around 0.7840," Valeria added.