AUD/USD succumbing to gravitational pull below 100 4HR EMA

• AUD/USD trades between a range of 0.6904 and 0.6931.
• Recovering despite risk off market place with a focus on Sino and U.S. trade spat.
• 200 HR SMA supports. 

The Aussie has recovered from the trade war-induced lows today as stocks correct higher in the ebbs and flows of today´s markets. The collapse in the trade talks between the US and China has been a source of concern in the markets, but for the Aussie, the RBA around the corner has previously suggested that they could be cutting interest rates as a tool to buoy the economy and is the most keenly awaited event.

AUD net shorts increased 

Analysts at Rabobank noted that due to US/China trade tensions and on speculation of a potential June RBA rate cut, Aussie shorts increased as follows ...

Source of the image is from Rabobank

The RBA Governor's speech last week offered markets the strongest guidance yet that "at [the] meeting in two weeks' time, [they] will consider the case for lower interest rates" all on Tuesday. 

As a result, Westpac now expects that with "the June cut now almost certain; a second in August; ... a November cut should also proceed". This third cut clearly has implications for our A$ forecasts and expectations. Back in February, when we forecast two rate cuts, we lowered our year-end forecast to 0.68; we have now cut that forecast further to 0.66.

The analysts at Westpac argued.

AUD/USD levels

AUD/USD reached the top of descending interim channel at 6940 within a broader bear trend, supported at a key 78.6% Fibo above the six-week downtrend channel resistance line at 0.6894. The price has been supported by bullish daily stochastics so far, and if price breaks higher above the 20 DMA and 23.6% Fibo line as well as the 100 4HR EMA, the 0.70 handle comes into play. Above there, the 15th March double bottoms + 50 DMA/38.2% Fibo (confluence) should make for a tough resistance. If the funda is bullish enough, the price can set a course to the top of broader channel resistance and will be looking to test the 200 DMA thereafter - 7030/50 should be tough resistance. However, a material rejection from here, the 100 4HR EMA, the 0.6744 Jan 2018 low comes back into play.