AUD/USD drops to a session low of 0.6764
Notably, price is falling towards a test of the key hourly moving averages near 0.6748-59 now as sellers look to wrestle back some control of the pair.
The move lower in the aussie comes alongside a wave of weakness among risk assets and equities in the session as traders/investors keep up with the ‘buy the rumour, sell the fact’ play on the trade truce struck last week.
European equities are weaker across the board while US futures are down to session lows, weaker by 0.1% on the day.
There hasn’t been much encouragement of a significant follow through of optimism surrounding the trade truce and given time, I would only expect more questions to be raised about the durability of the ceasefire between US and China.
Looking back at AUD/USD, we’re approaching a key crossroads in the near-term after buyers failed to firmly breach above the 0.6800 handle and is dropping towards key support levels mentioned above.
If sellers manage to regain near-term control with a push below the key hourly moving averages, we could see price start to threaten the month’s lows once again.
A key risk to watch out for this week for the aussie would be the labour market report on Thursday. I would expect that and trade headlines to be the dominant factors in affecting trading sentiment for the currency.