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AUD/USD trying for 0.7100, but gains remain limited

10/26/2018, 11:03:29 AMTrading Strategies
AUD/USD trying for 0.7100, but gains remain limited

The AUD/USD remains trapped underneath the 0.7100 major technical level, and Thursday's recovery action was unable to push the Aussie pair back over the critical handle despite broader markets bringing sentiment back on-balance, albeit tentatively.

The Aussie continue to trade into the downside on US-China trade war pressures, as well as steepening fears of an economic slowdown through the broader Asia-Pacific region, specifically within China as US tariffs begin to have an effect. The Australian economy, heavily reliant on exporting goods to neighbors in order to balance the books, is seeing economic growth slump as foreign trade suffers at the hands of the US' trade tariffs on China.

This week has been devoid of any meaningful action for the Aussie on the economic calendar, and the trend will remain to closes out the week, although Japan's inflation figures due super-late on Thursday (23:30 GMT) could see risk flows in the Asian market session buck, but the numbers are expected to remain steady.

AUD/USD levels to watch

The best-case scenario for the Aussie is to continue holding the middle, but according to FXStreet's own Valeria Bednarik, the downside remains a very real risk: "the pair offers a neutral-to-negative stance in the 4 hours chart, as the intraday advance was rejected by selling interest around a bearish 100 SMA, now also trading below a bearish 20 SMA. Technical indicators in the mentioned chart, however, remain directionless around their mid-lines, as the pair bottomed again some 15 pips above the yearly low of 0.7040. A break below this last should signal a test of the 0.7000 level while a weekly close below this last should leave doors open for a steeper decline toward the 0.6820 price zone."

Support levels: 0.7040 0.7000 0.6960

Resistance levels: 0.7090 0.7120 0.7155