AUDUSD Lower As China Slaps Australia With An Import Ban. Here’s What Happened.

AUDUSD is leading losses against the majors today after China retaliated against Australia. The currency pair is currently down by 0.59% from its opening price as it trades around 0.6451. What happened?

Earlier today, China announced an import ban against four meat slaughterhouses who had a combined export target value of $3.5 billion for 2020. This move came days after the Asian giant warned that it would impose an 80% tariff on Australian barley. According to some reports, this move from China could have been triggered by Australian Prime Minister Scott Morrisson’s calls to investigate the origins of the coronavirus.

With this, the improvement in the NAB Business Confidence report for April was easily shrugged off. According the bank’s survey, business-owners grew less pessimistic last month with the index at -46 after coming in at -65 in March.

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AUDUSD Outlook

On the 4-hour time frame, it can be seen that AUDUSD has pulled back most of its recent gains. By drawing the Fibonacci retracement tool from the low of May 7 to the high of May 11, the current price on AUDUSD pointedly corresponds to the 61.8% Fib level. This price, around 0.6445, also aligns with the 100 SMA and the rising trendline from connecting the highs of April 21, April 23, and May 7. Reversal candles around the area could suggest that AUDUSD may soon rally to near-term resistance at 0.6560 where the currency pair topped on May 11.

On the other hand, a strong close below today’s low at 0.6431 could mean that AUDUSD is still headed lower. Support could be around 0.6308 where the currency pair could test the 200 SMA.

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