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Faces Headwinds From USD & Iron Ore

AUD

AUD/USD dropped on Tuesday, rising US yields and pressure on equity indices kept broad dollar indices in favour, rising just shy of 0.5%, which pushed AUD/USD lower.

  • Iron ore futures posed another headwind to the pair after erasing Monday's gains. There are some jitters that the power crunch in China could crimp demand and outweigh the effects of stockpile building that were adduced for iron ore upside last week.
  • From a technical perspective AUD/USD rebounded last week and is testing the 20-day EMA. A reversal lower would signal a resumption of the near-term downtrend. This would open 0.7220 ahead of a Fibonacci support at 0.7194. The bear trigger is unchanged at 0.7106, Aug 20 low - a break would confirm a resumption of the bear trend that started late February. Firm resistance is seen at 0.7350, the 50-day EMA.
  • There are no domestic economic releases on the docket today, markets look ahead to private sector credit data tomorrow, and PMI figures on Thursday.

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