AUD/USD drops to fresh session lows, around 0.7700 mark
|- AUD/USD witnessed some heavy selling on Friday and snapped three days of winning streak.
- The risk-off mood benefitted the safe-haven USD and weighed on the perceived riskier aussie.
The AUD/USD pair continued losing ground through the mid-European session and dropped to two-day lows, around the 0.7700 round-figure mark in the last hour.
The pair witnessed some aggressive selling on the last trading day of the week and snapped three consecutive days of the winning streak. A turnaround in the global risk sentiment – as depicted a sharp pullback in the equity markets – provided a modest lift to the safe-haven US dollar. This, in turn, exerted some downward pressure on the perceived riskier Australian dollar.
The ever-increasing coronavirus cases and the imposition of a partial lockdown in China's capital city of Beijing resurfaced market worries about the potential economic fallout from the pandemic. Given that a lot of optimism was already priced in the markets, the developments prompted investors to take some profits off the table, especially after the recent bullish run to record highs.
That said, the likelihood of more aggressive fiscal spending in 2021 under Joe Biden's presidency might continue to boost investors' risk appetite. This, coupled with retreating US Treasury bond yields, might keep a lid on any strong gains for the USD. This could extend some support to the AUD/USD pair and help limit any deeper losses, at least for the time being.
Nevertheless, the AUD/USD pair has now erased a major part of its gains recorded over the past two trading session. Market participants now look forward to the release of the flash US PMI prints. This, along with developments surrounding the coronavirus saga, might influence the USD price dynamics and assist traders to grab some short-term opportunities.
Technical levels to watch
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