AUD/USD: Aussie back to 0.78 amidst geopolitical turmoil

• Risk aversion is dragging down commodities, correlated currencies.
• Market sentiment to be the key driver in Friday's trading.

The AUD/USD has fallen below the 0.7800 level heading into the overnight session after declining steadily in Thursday's trading. The markets quickly spun into a risk-off mood yesterday, and commodity currencies like the Aussie took a beating. 

Markets are still prone to fearful fits of fleeing in the face of ongoing political turmoil: Trump's tariffs on steel and aluminum, future tariffs aimed at China in a blatant show of aggression, and the constant changing-of-the-guard within Trump's White House administration is all sending risk appetite roiling. Further risk aversion comes today following special investigator Mueller's subpoena of Trump Organization documents relating to the ongoing Russia-Trump collusion investigation.

Friday is going to see market sentiment in the driver's seat with no macro figures for Australia, though Reserve Bank of Australia Assistant Governor Guy Debelle will be speaking at 22:45 GMT today. Dubelle will be speaking at the Financial Risk Day event hosted by the Centre for Financial Risk in Sydney, but his topic will be on risk and return in a low-interest environment, and it is unlikely the assistant governor will be addressing monetary policy directly unless he happens to be asked specific questions about it.

AUD/USD Technicals

As noted by FXStreet's Valeria Bednarik, "The pair entered a selling spiral after failing to extend gains beyond the 0.7890 Fibonacci resistance, pierced briefly earlier this week. In the 4 hours chart, the decline accelerated after the pair broke below its 200 EMA, now also developing well below the 20 SMA, which gains bearish traction well above the current level. The Momentum indicator in the mentioned chart heads lower within bearish territory, while the RSI stabilized near oversold territory, none of them offering signs of exhaustion or a possible recovery. The bearish pressure may ease on a recovery above 0.7820, the 50% retracement of the December/January rally, while further declines could be expected on a break below 0.7775, the immediate support."

Support levels: 0.7775 0.7740 0.7710

Resistance levels:0.7820 0.7860 0.7890