GOLDWELL：AUDUSD Under Pressure After Trump Casts Doubt

The AUDUSD dipped significantly in mid-week trading as market risk sentiment deteriorated following the rejection by US President Trump of further negotiations with Democrats over a new fiscal stimulus package.

The bombshell announcement came after encouraging signs were given by US Treasury Secretary Mnuchin over the weekend that he and Democrat leader Pelosi were on track towards an agreement for a new fiscal stimulus deal to support the ailing American economy. The sudden U-turn in this long-standing saga sent investors scurrying towards the safe havens US Dollar and gold later in the session to the detriment of the Aussie Dollar.

Earlier this Tuesday, the Royal Bank of Australia announced a status quo on its monetary policy as its position remains unchanged vis a vis being ready to step in when needed to boost the economy in the event of a downturn in key indicators, doing little to affect the AUDUSD. The Australian trade balance figures released today did little to boost optimism in the pair as the numbers came in largely below expectations at 2643 M.

From a technical perspective, the AUDUSD appears to be stabilizing around the 0.71 marks right above the 0.786 Fibonacci retracement level. The main trend in the pair seems to be veering towards the bears through a play on the downside support at 0.70 would only come into play if the pair firmly breaches the 0.71 marks. For now, there are signs of buying interest at this point which may translate into a consolidation play around the 0.715 marks before pushing lower in the medium term.

(Chart Source: Tradingview 07.10.2020)

The 20-day moving average in red will constitute the true test for bulls and will likely put up strong resistance to any moves above. The point to watch for in the run-up will be the 0.71580 marks which should serve as the pivot point and an early signal for bulls to step in. On the downside, the 0.70885 marks should provide some degree of support through the stronger support of 0.7050 will likely be the real test for bears.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.