The Aussie Dollar depreciates for the second consecutive day amid growing risk aversion.
Global trade uncertainty grows with US trading partners awaiting a letter from Trump announcing unilateral tariffs.
AUD/USD approaches the neckline of a Double Top pattern at the 0.6535-0.6545 area.
The Australian Dollar is trading lower for the second day in a row, retreating from year-to-date highs, at 0.6590, with risk-sensitive assets weighed by growing tariff uncertainty as the July 9 deadline comes closer.
US President Donald Trump affirmed on Thursday that he will start sending letters to partners informing them about the tariffs that will be applied to their products. This news put investors on edge about a serious disruption of global trade and casts a shadow on net exporter countries, like Australia.
The pair had turned lower somewhat earlier, as a stronger-than-expected US Nonfarm Payrolls report eased concerns about the country’s labour market and crushed hopes of imminent rate cuts by the US Federal Reserve.
Technical Analysis: A Double Top at 0.6590 might be anticipating a deeper correction
From a technical perspective, the pair is consolidating gains after last week’s bullish move, but the double top at 0.6590, coupled with a lower high on Thursday and the 4-hour Relative Strength index crossing below the 50 level, suggests that bears are taking over.
The pair should breach the 0.6535-06545 area (July 2,3 lows), to activate the DT pattern and confirm a deeper correction. The figure’s measured target is the confluence of the 38.2% Fibonacci retracement of the June 23-July 1 rally and June 27 low, at 0.6510.
On the upside, the pair should breach the mentioned July 1 and 2 high, at 0.6590, to resume the broader bullish trend and set its focus on the 127.2% and 161.8% Fibonacci extensions of the June 27 - July 1 upleg, at 0.6610 and 0.6640, respectively.
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