🏄 Grow your portfolio even on vacation with InvestingPro | Summer Sale 50% OFFCLAIM SALE

AUD/USD: Downward Dynamics Prevail

Published 08/08/2019, 07:38 AM

The escalation of the trade war between the United States and China has strengthened expectations of a worsening situation in world international trade and the economy. The growth of fears about this caused a collapse of stock quotes and indices on world stock markets. Demand for safe-haven assets, such as government bonds, yen, gold, has risen sharply. On Wednesday, gold prices exceeded $ 1,500 an ounce for the first time in six years. Since the beginning of the month, prices have increased by 6.9%, and from the end of May - by 15%. Yields on 10-Year US Treasury bonds fell on Wednesday to 1.595% from 1.864% on Friday, to the lowest level since October 2016.

Last Wednesday, interest rates fell immediately by three central banks (India, New Zealand and Thailand). On Wednesday, the RBNZ lowered its official interest rate by 0.50% to 1.00%, which was the second rate cut this year.

As follows from the text of the RBNZ statement, "global economic activity continues to weaken ... increased uncertainty and reduced international trade contribute to lower economic growth in the trading partner countries ... and central banks relax monetary policy to support their economies".

The RBA last Tuesday left the key interest rate at a record low of 1%, but gave a pessimistic forecast for the economy. "It is reasonable to expect that a long period of low-interest rates will be required to progress towards lowering unemployment and achieve steady progress towards the target inflation rate", Philip Lowe said on Tuesday.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.

At 23:30 (GMT) on Thursday, Lowe will begin speaking with members of the parliamentary committee on economics. If he points out that the key rate needs to be lowered again, then the Australian dollar will again be under pressure. In this case, the pair AUD / USD will again go “south” as part of a global downtrend.

At the beginning of the European session, the pair AUD/USD is trading near the level of 0.6787, correcting after falling on Wednesday.

Nevertheless, negative dynamics prevail, despite the correction. It is likely that the current position of AUD/USD and growth to the levels of 0.6800, 0.6816, 0.6830 will be a good opportunity to resume sales of this currency pair.

We can return to the consideration of long positions only after the growth of AUD/USD to the zone above the resistance level of 0.6910 (EMA200 on the 4-hour chart) with targets not higher than the key resistance level of 0.7065 (EMA200 on the daily chart).

In case of resumption of decline, the targets will be the support levels 0.6680, 0.6600. The distant target is located at support levels of 0.6260, 0.6000 (lows of 2008-2009).

Support Levels: 0.6745, 0.6700, 0.6680, 0.6600, 0.6300

Resistance Levels: 0.6816, 0.6830, 0.6865, 0.6910, 0.7000, 0.7065

Trading Recommendations

Sell ​​by market. Sell-Limit 0.6800, 0.6816, 0.6830. Stop-Loss 0.6870.

Take-Profit 0.6745, 0.6700, 0.6680, 0.6600, 0.6300

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.
AUDUSD-Weekly

Which stock should you buy in your very next trade?

With valuations skyrocketing in 2024, many investors are uneasy putting more money into stocks. Unsure where to invest next? Get access to our proven portfolios and discover high-potential opportunities.

In 2024 alone, ProPicks AI identified 2 stocks that surged over 150%, 4 additional stocks that leaped over 30%, and 3 more that climbed over 25%. That's an impressive track record.

With portfolios tailored for Dow stocks, S&P stocks, Tech stocks, and Mid Cap stocks, you can explore various wealth-building strategies.

Unlock ProPicks AI
Read Next

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.