Trade Tensions With China And Option Activity Could Temper AUD Upside

Seeing AUD/USD come under some slight pressure in Asia, last down 12 pips at 0.7548. Tensions between Australia and China continue to simmer. Earlier Australian Trade Minister Birmingham said Australia will approach the WTO to challenge tariffs imposed by China on its barley exports. He added Australia reserve the right to invoke further WTO action against China.

• The 0.75 handle could come into play during the week, there are approximately AUD 2.7b worth of options rolling off at the 0.75 strike.
• From a technical perspective AUDUSD is holding onto recent gains and remains bullish. The Dec 2 break of 0.7414, Sep 1 high and former key resistance confirmed a resumption of the uptrend that began Mar 19. Moving average studies are also in a bull mode highlighting current sentiment. The focus is on 0.7583, the Jun 14, 2018 high and 0.7638, a Fibonacci retracement. Key short-term support is at 0.7373, Dec 7 low. Initial support lies at 0.7507 and 0.7427