AUD/USD: Corrective rally stalled near 4H 50MA on trade battles

• AUD/USD recovery seems to have run out of steam around bearish 4H 50MA.
• Trade fears and the resulting risk-off could continue capping upside in AUD.

The corrective rally in AUD/USD from 0.7345 (June 21 low) seems to have run out of steam around the downward sloping (bearish) 50-candle moving average (MA) on 4-hour chart likely due to trade fears and the resulting risk aversion in the financial markets.

At press time, the currency pair is trading at 0.741 and the downward 50-candle MA on 4-hour is located at 0.745.

The fears of US' trade battles with the rest of the world pushed US stock markets lower on Monday. The Dow Jones Industrial Average (DJIA) closed below the 200-day moving average (MA) for the first time since June 2016 and the VIX index jumped to a high of 19.61 and closed above the psychological level of 15.

The risk-off tone in the financial markets could be capping the upside in the AUD and other risk assets. The currency pair may run into offers if risk aversion worsens as indicated by the spike in the VIX index.

AUD/USD Technical Levels

Resistance: 0.7425 (4H 50MA), 0.7444 (resistance in 4H chart), 0.7473 (May 1 low).

Support: 0.74 (5-day MA), 0.7345 (last week's low), 0.7327 (61.8% Fib R of 2016 low - 2018 high).