AUD/USD treads water near mid-0.70s amid thin trading conditions
- China and U.S. continue to discuss trade.
- US Dollar Index stays in a tight range below 97.
- Coming up: Christmas holiday.
After losing more than 100 pips last week, the AUD/USD pair staged a modest recovery in the early trading hours of the new week and advanced to 0.7070 before losing its momentum. At the moment, the pair is up 0.2% on the day at 0.7057.
Revived hopes of the U.S. and China taking decisive steps to bring the trade conflict to an end helped the aussie gather some strength. In a statement released over the weekend, China's Ministry of Commerce said that a vice-ministerial-level call between the U.S. and China saw "a deep exchange of views" on trade imbalances and intellectual property protections. However, the pair didn't point out to specific progress in talks.
On the other hand, following last Friday's rally, the greenback struggled to preserve its momentum on Monday and has gone into a consolidation phase below the 97 mark. Although Chicago Fed is scheduled to release its National Activity Index later in the session, the market is unlikely to react as trading volume thins out hours before Christmas holiday starts. At the moment, the DXY is down 0.15% on the day at 96.80.
Technical levels to consider
The initial support for the pair aligns at 0.7030 (Dec. 21 low) ahead of the critical 0.7000 (psychological level). On the upside, resistances are located at 0.7070 (daily high), 0.7120 (Dec. 21 high) and 0.7180 (100-DMA).
AUD/USD Forecast 2019: Collateral damage from the US-China trade war.