- AUD / USD retreats to key support as the US dollar gains risk.
- The escalating US-China tensions could maintain the greenback’s best offer.
- Lowe of RBA is scheduled to speak at 02:30 GMT.
AUD / USD is rapidly closing key support against a background of general demand for the US dollar.
The currency pair has only 10 pips of 0.6555 – the upper end (old resistance become support) of the contracting triangle represented by trend lines connecting the peaks of April 30 and May 11 and the troughs of 4 and May 15.
A return to the interior of the contracting triangle would invalidate the bullish break confirmed on Wednesday. This seems likely at the time of publication, as the futures on the S&P 500 signal risk aversion with a decline of 0.4%.
Risk aversion could worsen over the next day, further strengthening demand for the US dollar as US-Chinese tensions intensify. President Trump was out of the wire a few minutes ago, accusing China of waging a massive disinformation campaign and allowing the coronavirus to spread around the world.
In addition, repeated warnings from WHO and medical experts that too early relaxation of social distancing measures could lead to an outbreak of infections could increase downward pressures around the Australian dollar and other risky assets.
That said, the AUD could find offers if the Governor of the Reserve Bank of Australia Lowe downplayed the need for more stimulus in the near future during this 2:30 GMT speech. The RBA has already stopped buying bonds.