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AUD/USD: Traders looking for a catalyst as price bases on S1

  • AUD/USD is based on S1 as we move in towards the Tokyo open where, although there would be plenty of Japanese data, the schedule for the Aussie is empty and it looks like it could be a pretty subdued close for the week in Asia. 
  • AUD never recovered from weak Chinese profits data and is currently trading at 0.7029, up from a low of 0.7017 but still wearing pain from the 0.7078 Boxing Day drop.

The commodity complex has traded in tandem with the performances of stocks and Chinese data. The Aussie was on the backfoot following  Chinese industrial profits turning negative for first time in almost three years as well as from the headlines where Trump is considering a ban on Huawei, ZTE technology by US companies.

Commodity complex under pressure

While there is a lack of domestic news to run with, the dollar and US politics is taking the reigns. There have been a number of conflicting headlines around Sino/US trade relations which has left the market spooked and short of anything concrete, hence, during thin liquidity, the Aussie can move around and we are likely set for some further volatility into the New Years as the markets look for a fair value and a footing to base from. Base metals and oil are trading as equity derivatives and the commodity and high beta currencies feeling the pain. While, there are no scheduled events, and with the majority of markets still off on holiday mode, trade headlines are the one to watch out for into the close. 

AUD/USD levels

Valeria Bednarik, Chief Analyst at FXSytreet explained that technical readings in the 4 hours chart confirm the bearish stance:

"Technical indicators resumed their declines after flirting with their midlines, the RSI now nearing oversold levels and the Momentum steady below its 100 level. In the same chart, a bearish 20 SMA keeps acting as dynamic resistance, attracting selling interest on upward moves, while the 100 and 200 SMA gain downward strength far above the current level. The decline will likely gain downward momentum on a break below 0.6990, now the immediate support."

  • Support levels: 0.6990 0.6965 0.6940
  • Resistance levels: 0.7035 0.7070 0.7100 

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