AUD/USD is sitting on an attractive trend pullback level!
Speculations that the Fed won’t need more aggressive interest rate hikes in the foreseeable future has been weighing on USD in the last few weeks.
In fact, AUD/USD has been making higher highs and higher lows since finding support at the .6750 area in mid-July!
More recently, AUD found resistance at .7125 and is trading closer to the .7000 major psychological handle.
AUD/USD: 4-hour
AUD/USD 4-hour Forex Chart
As you can see, .7000 is right at the 50% Fibonacci retracement of last week’s upswing. It’s also near the 4-hour chart’s 100 SMA and the ascending channel support that’s been solid since the uptrend started.
Are we looking at a trend pullback opportunity?
AUD/USD could find demand at .7000 and revisit its August highs near .7125 if not make new monthly highs.Not everybody is happy to buy high-yielding assets like AUD, though.
In case you missed it, traders are worrying about global growth again after China‘s data releases mostly missed market expectations.
The data was so bad that the People’s Bank of China (PBOC) surprisingly cut its interest rate yesterday. Financial News, a paper backed by PBOC, also printed an article saying that China will need more monetary and fiscal stimulus to boost economic growth. Yikes!
Australia’s labor market data scheduled on August 18 at 1:30 am GMT might also add to the anti-AUD party.
Markets expect the economy to add a net of 26,500 jobs in July, which is way lower than the 88,400 increase in June. A weaker labor market could push the Reserve Bank of Australia (RBA) to take a chill pill with its interest rate hikes and discourage some traders from buying AUD.
For now, global growth concerns could continue to weigh on risk assets and extend AUD/USD’s downswing.
Watch out for extended risk aversion, which can drag AUD/USD below the ascending channel enough to revisit areas of interest like .6940 and .6880.
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