AUD/USD jumps to 0.7220 as US dollar tumbles on US-China negotiation reports
- According to WSJ, US Treasury Secretary Mnuchin weighs lifting tariffs on China.
- US Dollar drops sharply on China tariffs story.
- AUD/USD breaks 0.7170 and jumps to test weekly highs.
The AUD/USD pair rose from below 0.7175 to 0.7220 in a few minutes, reaching the highest level in two days. The move to the upside took place following a WSJ article mentioning that US Treasury Secretary Mnuchin was considering lifting tariffs on Chinese products. Reuters reported later that a US Treasury spokesman denied that neither Mnuchin nor Lighthizer offered a recommendation regarding tariffs.
After the spike to 0.7220, AUD/USD pulled back to 0.7185. Near the end of the day was hovering around 0.7200, in positive territory for the day. The Aussie and the Kiwi were the most benefited by recent market volatility on the trade war news.
Technical outlook
“Aussie traders have been struggling with direction throughout the week, with the precedent bullish momentum fading, but the AUD/USD pair holding above a key static support at 0.7155, the 61.8% retracement of the December/January slide”, said Valeria Bednarik, Chief Analyst at FXStreet.
According to her, the 4 hours chart turned bullish, extending its advance above directionless moving averages and with technical indicators aiming higher and reaching fresh weekly highs. “Renewed selling pressure below the mentioned Fibonacci support should favor a downward extension, moreover if market sentiment turns again sour, while the bullish case will be more solid on an advance beyond 0.7250.”