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AUD/USD drops below 100-HMA on domestic political distractions

2018-8-23 10:09:21Market Analysis
AUD/USD drops below 100-HMA on domestic political distractions

The Aussie dollar is feeling the pull of gravity in Asia.

The AUD/USD fell below the 100-hour moving average (MA) earlier today and was last seen trading at a session low of 0.7319, having created a inside day candle yesterday.

The domestic political uncertainty is likely the main reason for the weakness in the Australian currency. Three crucial Cabinet ministers — Mathias Cormann, Mitch Fifield and Michaelia Cash — have withdrawn their support for Prime Minister Malcolm Turnbull. As a result, there could be a leadership change later today.

Further, the Fed minutes released in the NY session made it clear that the interest rates are rising next month, meaning the yield or rate differential is set to widen further in the USD-positive manner.

And last but not the least, the White House is likely to hit China with $16 billion worth of tariffs later today.

So, it seems safe to say that the investors have little reason to hold or buy Aussie dollars. However, the pair could change direction if the US delays China tariff move and the political situation in Australia changes for good.

AUD/USD Technical Levels

Resistance: 0.7324 (100-hour MA), 0.7353 (50-hour MA), 0.7371 (resistance as per the hourly chart)

Support: 0.7291 (200-hour MA), 0.7271 (61.8% Fib R of 0.7202/0.7382), 0.72 (psychological support)