AUD/USD under pressure on major Yuan weakening

The Australian Dollar is weakening across the board, following the weakest yuan fix against the US Dollar since August 2015 as USD/CNY hits its highest level since Jan 2011. The downward pressure in AUD/USD, just breaking 0.74 at present, adds to the jitters caused by the Brexit outcome last Friday, and ahead of Australia's general election on July 2nd.

Placing today's USD/CNY into perspective

PBOC set today's USD/CNY at 6.6375 vs 6.5776, which translates into the weaker one-day fix weakening (-0.9%) since the August 2015 devaluation of the Yuan. This has led to USD/CNY at its highst level since Jan 2011. Additionally, the PBOC has injected 270bn yuan via 7-day reverse repos as part of its daily liquidity injection operations following the Brexit outcome in the UK.

AUD/USD outlook

Technically, Valeria Bednarik, Chief Analyst at FXStreet, notes:" Having closed the week at 0.7464, the daily chart shows that the Momentum indicator is aiming to cross its 100 level towards the downside, whilst the RSI heads south around 55, not enough to confirm a bearish continuation. In the same chart, the price stands well above a bullish 20 SMA, currently around  0.7410, and will take a daily close below this last to see the pair entering in a selling spiral. Shorter term, the 4 hours chart shows that the price was unable to recover above a now flat 20 SMA, providing an immediate resistance around 0.7500, whilst the technical indicators are now retreating from their mid-lines, limiting chances of a stronger recovery at this point."

Key levels - Valeria Bednarik

Support levels: 0.7450 0.7400 0.7360 / Resistance levels: 0.7500 0.7540 0.7575