Trade tensions are proving to be a double whammy for the pair
With US-China trade relations set to sour even further, that’s putting a bid in the yen while also leaving the aussie offered at the same time. Couple with the fact that there is gaining traction that the US may start to target Japan next on the trade front, it’s adding a second layer of bids for the yen and the negative tones there isn’t going to help the aussie either as equities continue to fall.
The pair is moving further away from support around 80.00 and with the 61.8 retracement level @ 79.32 also looking to give way today, it opens up the potential for further downside in the pair from here.
The aussie has its own problems already (RBA not hiking, household debt issues, stagnant wages, flagging inflation) but the fact that there is the threat of escalating trade tensions between US and China (and also Japan) is making it tough to see a reason for buyers to stay buoyant. Add the technical break above and it’s a real slippery slope from hereon.
There is some minor support around 78.50 to 78.70 but you’d have to be really nit-picky to point out support levels in a chart like that. With fundamentals amplifying further reason to the downside, the fall tends to stop when it stops.
Look out for the daily close today. If it holds a firm break below 79.32, this could get a bit ugly.