AUD/USD extends correction to test Friday highs in 0.7050's

• AUD/USD bulls stop in thin holiday trade, testing 0.7050 and Friday highs.
• On the flipside, 0.6995/75 targets 0.6827 the 2016 low.

AUD/USD has continued to correct the fade of the opening high at 0.7051 from the lows of 0.7033 and has extended to a current high of 0.7050.

AUD/USD traded on the back foot on Friday following a risk-off session that sent the antipodeans down by 1% with a 2% slide on Wal Street. There were jitters over Trump's heightened disfavour of Fed policy as well as the US government partial shutdown, ongoing Sino/US trade tensions and concerns over the global growth outlook. 

• The United States Economy and Politics in 2019

As a result, AUD/USD has now penetrated the 76.4% Fib of the Oct-Dec lift leaving a bear engulfing candle on a technical basis. However, in thin liquidity, AUD/JPY is on the bid as the yen sells off. AUD/USD is looking to challenge Friday's highs here at the midpoint of the 0.70 handle. 

AUD/USD levels

Technically, the pair remains bearish with daily RSIs weighing and raising prospects of a test of the 2018 low at 0.7020. A break there opens room to the February and January 2017 lows. 

"We have TD support at 0.6995 and below 0.6995/75 targets 0.6827 the 2016 low. The market is on the defensive. Rallies will find initial resistance at the 55-day ma at 0.7187 and will need to regain the September and early November highs at 0.7302/14 to reassert upside interest to the 200-day ma at 0.7376,"

analysts at Commerzbank explained.