FxWirePro: AUD/USD retraces below 0.65 handle, escalating Australia-China trade tensions and dismal data weigh on the Aussie

Fundamental Outlook:

Escalating Australia-China trade tensions along with dismal Australian NAB Survey and Chinese inflation figures weigh on the Aussie dollar.

China has implemented a ban on import of red meat from Australia's big four major abattoirs in an apparent escalation of Beijing's trade war tactics. 

The move comes just days after China flagged plans to introduce an 80 per cent tariff on Australian barley.

On the data front, National Australia Bank's Business Confidence rose to -46 in April from March's -66 and Business Conditions ticked higher to -34 from -21 in March.

NAB indices remain in the negative territory and failed to put a bid under the Aussie dollar as poor China data dents.

China's Producer Price Index fell by 3.1%, more than expectations for a 2.6% drop and compared to March's -1.5% reading. 

The Consumer Price Index came in at -0.9%, missing expectations for a 0.5% decline and compared to the preceding month's print of -1.2%. 

Technical Analysis:

AUD/USD is extending weakness for the 2nd straight session, slips below the 0.65 handle.

The pair was trading 0.45% lower on the day at 0.6460 at 04:15 GMT after closing 0.63% lower in the previous session.

Technical bias for the pair has turned neutral after failure to hold above 110-EMA. 

Price action has slipped below 5-DMA, but finds strong support in the 0.6418-0.6411 zone.

The pair is extending gains in a 'Rising Channel' pattern and break below channel base (0.6370) could change near-term trend to bearish. 

On the flipside, retrace above 110-DMA could see upside continuation. Next major hurdle lies at 200-DMA at 0.6668.

Major Support Levels: 0.6412 (21-EMA), 0.6370 (Channel base)

Major Resistance Levels: 0.6475 (5-DMA), 0.65 (110-EMA)

Guidance: Watch out for break below 21-EMA and channel base for further weakness.