AUD/USD Capped at 200-DMA, Drops Below 0.7250 on Global Risk-Off

AUD/USD Capped at 200-DMA, Drops Below 0.7250 on Global Risk-Off

After failing to sustain its strength back above the very important 200-day SMA, the AUD/USD pair is trading weak below 0.7250 despite of better-than-expected trade-balance data.

On Tuesday, the pair got a boost from strong GDP print for the first quarter of 2016, pushing the pair beyond 200-day SMA to 0.7300 handle. The pair, however, lost upside momentum on better-than-expected US ISM manufacturing PMI data and traded back below 200-day SMA.

On Wednesday, the pair initially attempted to move back above 200-day SMA after Australia's trade balance data for April came-in to show deficit narrowing to 1579 million from 1971 million recorded in March and beat expectations of 2110 million.

Traders now turn their attention to the releases of ADP report on private sector employment from the US ahead of the key official jobs report on Friday. In the meantime, traders would continue to take cues from the risk sentiment, influencing demand for commodity-linked and high yield currencies like the Australian Dollar.

Technical levels to watch

On the immediate downside, 0.7220 level, closely followed by 0.7200 round figure mark, now seems to protect immediate downside. Failure to hold these immediate support levels is likely to turn the pair vulnerable to resume its near-term downward trajectory and drop back towards 0.7180 intermediate support before heading back towards nearly 3-month lows support near 0.7150-45 zone.

On the upside, the pair need to sustain its move above 0.7250 level (200-day SMA), beyond which it could make a fresh attempt to clear 0.7300 handle and head towards its next major resistance near 0.7320-25 area.