AUD/USD extends losses towards 0.7700 as USD rebound picks up pace
|- AUD/USD drops amid risk-off mood-led US dollar bounce.
- Weaker-than-expected Australian Retail Sales add to the downside.
- Markets await US Markit PMIs and Biden’s speech for fresh cues.
AUD/USD is holding the lower ground below 0.7750, as the US dollar rebound gathers traction in early Europe amid souring risk sentiment.
Skepticism propped up over the passage of US President Joe Biden’s ambitious $1.9 trillion stimulus package in Congress, which has weighed on the market mood, lifting the haven demand for the US dollar.
Further, major global economies are still battling the coronavirus surge, despite the vaccines rollout, re-igniting global economic growth concerns. Therefore, investors flock to the safety bet US dollar at the expense of higher-yielding assets such as the aussie, S&P 500 futures etc.
At the time of writing, AUD/USD loses 0.35% to trade at 0.7736 while the futures tied to the S&P 500 index are seen at 3,825, down 0.27% on the day.
Moreover, the aussie also suffers as the Australian December preliminary Retail Sales showed a big drop of 4.2% MoM in December. The retreat in gold and oil prices also renders negative for the commodity-currencies such as the aussie dollar.
Attention now turns towards the US Markit Prelim PMIs and Biden’s speech for fresh trading incentives. In the meantime, the risk-off flows and USD dynamics will continue to have a major bearing on the spot.
AUD/USD: Technical levels
“The immediate technical bias remains neutral. That's because the pair is still trapped in a channel pattern represented by trendlines connecting Jan. 6 and Jan. 14 highs and Jan. 11 and Jan. 18 lows. A breakout would imply a continuation of the broader uptrend and shift risk in favor of a rally to 0.80, “FXStreet’s Analyst Omkar Godbole notes.
AUD/USD: Additional levels
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