A lack of fresh market catalyst sent the dollar higher across the board during the Asian session.
Can dollar bulls drag AUD/USD to a key support level?
To help you trade today’s setup, here are the top headlines that dominated today’s Asian session trading:
- Australia’s construction industry slump continues into August 2020
- Global pressures weighing on prices – ANZ
- Australia trade surplus narrows even as gold exports hit record
- Caixin PMI shows recovery in China’s services sector loses a step
Upcoming Potential Catalysts on the Economic Calendar:
- Switzerland’s CPI at 6:30 am GMT
- Spain’s services PMI at 7:15 am GMT
- Italy’s services PMI at 7:45 am GMT
- France’s final services PMI at 7:50 am GMT
- Germany’s final services PMI at 7:55 am GMT
- Eurozone’s retail sales at 9:00 am GMT
- Canada’s trade balance at 12:30 pm GMT
- U.S. ISM non-manufacturing PMI at 2:00 pm GMT
What to Watch: AUD/USD
AUD/USD is trading at the .7300 major psychological handle after breaking (and retesting) a trend line support that had kept the bulls going for most of last week.
The pair is now about 25 pips away from the 200 SMA, which lines up with an area of interest in late August.If today’s Eurozone PMI reports hint at a slower-than-expected global economic recovery, or if the Greenback maintains its bullish momentum until the U.S. services PMI is released, then we could see AUD/USD retest the 200 SMA.
If the dollar’s rally peters out, however, or if traders go back to taking risks during the London and U.S. sessions, then AUD/USD could find support at the .7300 MaPs and maybe try to go back to its uptrend above the broken trend line.
Keep in mind that AUD/USD’s average daily volatility is about 60 pips. This means we could either see another trend line retest or a test of the 200 SMA on the 1-hour time frame if Aussie bulls and bears inspire enough volatility.