AUD/USD TALKING POINTS

• The “risk-off” feeling keeps the Aussie on the back foot.
• Positive Chinese economic data is not enough to deter AUD bears.

FUNDAMENTAL CONTEXT OF THE AUSTRALIAN DOLLAR

The Australian dollar was unable to find offers in the middle of the European session after new Chinese yuan loans were better than expected CNY2.81B. The pace comes after further stimulus from policymakers in recent months to promote Chinese economic growth. Banks are now incentivized to increase lending amid a country hampered by COVID-19 cases via their “zero tolerance” approach to the virus.

ECONOMIC CALENDAR

Source: DailyFX Economic Calendar

GET YOUR AUD 2022 Q3 TECHNICAL FORECAST HERE!

Recessionary fears and demand destruction have made the Aussie dollar vulnerable lately with falling prices of key commodities (iron ore and gold) sending investors into risk aversion mode, thus preferring cash and US Treasuries. The Dollar Remains in Favor as We Look to the US CPI data later this week. The last weeks NFP beat completed the 75 basis points consensual point of view for fed‘s next meeting despite cooling talks on the recession. Either way, the dollar will be hard to reverse in the near term.

AUD/USD TECHNICAL ANALYSIS

AUD/USD AIDTABLE LY

Chart prepared by Warren Venketas, GI

Daily AUD/USD price action almost collapsed 0.90% against the greenback (at the time of this writing)trading below psychological 0.6800 level. Last week’s low is next on the charts at 0.6762, which would coincide with the wider falling corner graphic pattern (black).

The Relative Strength Index (RSI) continues to show bullish divergence (higher lows on the RSI while corresponding price action pushes lower), traditionally associated with impending upside.

Key resistance levels:

• 20-day EMA (purple)
• 0.6824

Main support levels:

• 0.6762/corner bracket
• 0.6700

IG CUSTOMER SENTIMENT DATA: BULLISH

The IGCS shows that retail traders are currently LONG on AUD/USDwith 72% traders currently holding long positions. At DailyFX, we generally take a contrarian view of crowd sentiment, however, recent changes in long and short positioning are resulting in a short-term bullish bias.

Contact and follow Warren on Twitter: @Wenketas