Donald Trump returns to the rhetoric of protectionism ("make America great again"), which provided him with electoral success. Together with growing concerns about the fiscal deficit and current account deficit, this will be a key factor limiting the potential for rebound of the dollar, which has been brutally overestimated in recent quarters.
Increased risk aversion and increased volatility will favor safe currencies, especially the yen, which is characterized by a sensitive speculative position that is prone to a correction. The slowdown in China, as reflected by the strongest decline in the PMI Manufacturing index in connection with the cooling of investment moods, should result in a decline in prices of industrial metals, which should also clearly affect the Australian Dollar. Deterioration of the terms of trade of this economy will contrast with the most favorable prices of goods exported by New Zealand for years, which speaks for the lowering of AUD / NZD to lower levels.
Let's now take a look at the AUD/USD technical picture at the H4 time frame. The market made a new local low below the technical support zone at the level of 0.7710 and currently is testing the technical resistance at the level of 0.7758. The momentum is weak as the RSI indicator line stays below its fifty level, but the market conditions favor the bounce higher. The next technical resistance is seen at the level of 0.7800, but the most important technical resistance level is still seen at the level of 0.7897 and only a sustained breakout above this level would change the overall bearish outlook.
