AUD/USD meets fresh supply, revisits daily low

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 7, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Mumbai) - The recovery in the AUD/USD pair from China crises-led slump lost legs near the mid-point of 0.70 handle and the prices reverted to daily lows heading into Europe.

    AUD/USD looks to test 0.7000

    Currently, the AUD/USD pair trades -0.59% lower at 0.7030, testing daily lows struck at 0.7025 at China open. The bears regained lost momentum and knocked-off the Aussie lower as risk-off sentiment continues to dominate markets, with European traders hitting their desks and digesting the aftermath of today yuan devaluation by the PBOC.

    The Chinese central bank’s weakened the yuan further, which stoked concerns over the health of the Chinese economy, as the PBOC tries constantly to spur country’s exports sector. Such a move triggered a renewed bout of risk-aversion across the financial markets, led by the slump in China stocks. China is Australia’s biggest trading partner.

    Moreover, falling oil prices and weaker copper and iron-ore prices also dented the sentiment around the resource-linked Aussie, and drowned the pair to fresh two-month lows. Later in the session ahead, markets will continue to monitor the sentiment on the European stocks and around the oil prices for fresh cues on AUD/USD.

    AUD/USD Levels to watch

    The pair heads higher and finds the immediate resistance at 0.7055/62 (1h 10 & 20-SMA) above which gains could be extended to the next hurdle located at 0.7086/0.7100 (round number). On the flip side, the immediate support located at 0.7000 (psychological levels). Selling pressure is likely to intensify below the last, dragging the Aussie to 0.6969 (daily S2).
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