- AUD/USD struggles to hold above 0.74 handle, slips lower to currently trade at 0.7378.
- The pair has taken support on the downside at 5-DMA at 0.7372, we see weakness on break below.
- That said, market focus will now be on the Reserve Bank of Australia's (RBA) policy meeting this week.
- Analysts expect the central bank to keep its cash rate at 1.5% but focus will be on the statement, on factors including the pressure on mortgage rates.
- Other factors that could influence the pair are the responses from China to the ongoing trade battle with the US, (6th July will be the imposition of tariffs on $34bn of Chinese imports).
- On the data front, we have May retail sales, building approvals and the trade balance to watch out for.
- Technical analysis support downside in the pair. But bullish divergence on RSI and Stochs calls for caution.
- Break below 5-DMA will raise scope for test of 61.8% Fib at 0.7327 ahead of 0.7160 (Dec 2016 low).
Support levels - 0.7372 (5-DMA), 0.7327 (61.8% Fib), 0.7160 (Dec 2016 low), 0.71 (78.6% Fib)
Resistance levels - 0.74, 0.7447 (21-EMA), 0.7452 (5W SMA)
FxWirePro Currency Strength Index: FxWirePro's Hourly AUD Spot Index was at 85.339 (Bullish), while Hourly USD Spot Index was at -46.1435 (Neutral) at 0600 GMT. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
