Australian Dollar Falls Amid U.S.-China Trade War Concerns

Fundamental Analysis

* Trade Tension: The Australian Dollar continued its decline against the US Dollar amid rising concerns over a potential trade conflict between the United States and China. U.S. President-elect Donald Trump has warned of imposing 100% tariffs on a group of nine nations if they pursue plans to establish a currency to rival the U.S. Dollar. Central to these developments is the BRICS alliance, comprising key global players such as China, Russia, Brazil, India, South Africa, Iran, Egypt, Ethiopia, and the UAE. As markets speculate on whether Trump will implement his campaign proposal of a 60% tariff on Chinese imports, global economic growth outside the U.S. is expected to feel the ripple effects regardless of the tariff’s magnitude. This dynamic is set to play a crucial role in shaping the U.S. Dollar’s trajectory.

Technical Analysis

* Technical Breakout: AUDUSD was traded lower following recent retracement from its high near the resistance level 0.65400. MACD which illustrate bearish momentum signal with the formation of death cross suggest the pair to likely extend its losses.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 0.64100. Conversely, a potential reversal is also to be expected and the price could head back towards 0.65400.

Potential Risks

Looking ahead, investors will focus on this week’s key U.S. economic data releases such as ADP Nonfarm Employment Change, Nonfarm Payrolls, and the Unemployment Rate, to gauge the market’s direction and sentiment.

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Monitoring

Stay updated on US data and Australia data, China updates, central bank updates and any shifts in the US Dollar’s strength by following PU Xtrader’s financial news page.

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