The aussie is weighed down by weaker risk sentiment to start the day
The low today touched 0.7002 before price now sticks around the October low support @ 0.7021. It's been a case of "will it, won't it?" for AUD/USD and the 0.7000 handle over the past week. But with thin liquidity conditions and equities holding up as 2018 came to a close, sellers were unable to build on a move to drive price lower.
But to begin the day here, we had disappointing Chinese data which not only hurts the aussie directly from worries about a growth slowdown in China, it also hurts the currency from a risk perspective as equities sentiment turned sour as well.
That continues to keep downwards pressure on the aussie ahead of European trading. Looking at the bigger picture:
Psychological and key support remains the 0.7000 handle and a firm break below that opens up a new wave of support levels to keep in mind:
- 0.6974 (9 February 2016 low)
- 0.6939 (24 September 2015 low)
- 0.6896 (7 September 2015 low)
- 0.6827 (15 January 2016 low)
I would very much disregard the first notable support @ 0.6974 as the daily close at the time still came above 0.7000 so once again, it's very much the case that the psychological barrier in play now is still the key level to watch out for.
In general, when it comes to breaks like these expect stops to be triggered and price to shoot down and back up rather quickly. But with support levels rather lacking following a move back below 0.7000, it could also open up further downside pressure towards 0.6900.
At the moment, the focus of markets is on risk so pay attention to how equities are going to perform later today; particularly US equities. Sellers remain in firm control of the pair so I reckon the 0.7000 level will still be one that is keenly eyed for the moment, until there is a second wave of selling in risk to hit markets later today that is.
