AUD/USD bears will be holding the upper hand while trade tensions between the U.S. and China remain high and look set to build nS0N1UT00Q nL5N1VX26M.
While the broad consensus is still that the tit-for-tat retaliation won't lead to a full-blown trade war, confidence in that conviction is starting to wither, leading investors to hedge their bets.
Developed economy equity markets have remained resilient as investors hedge their long equity bets by selling emerging market assets, commodities and the AUD.
The trade spat between the U.S. and China will likely drag on through the U.S. mid-term elections in early November and even the optimists believe the tensions will increase and market volatility will intensify before there is a resolution.
Hence AUD/USD bears are happy to sell rallies, confidently counting on the Trump White House to increase tariffs, followed by a measured retaliation from China.
Former AUD/USD resistance at 0.7145-60 is viewed as a selling window as a move below 0.7000 appears likely in this cycle, before a decent base will form.
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