AUD/USD consolidates biggest weekly losses in six months above 0.7000

AUD/USD seesaws near 0.7030/35 at the start of the week’s trading on Monday. The Aussie pair dropped to the lowest since July 20 on Friday before bouncing off 0.7004 by the end of the week. While the coronavirus (COVID-19) woes and the broad US dollar rally can be blamed for the quote’s weakness, recently positive signals concerning the US aid package and the virus vaccine indicate light at the end of the tunnel. However, those are still in the nascent stages and need back-up to perform.

Bulls defend 0.7000, but not for long…

With the run-up in equities during Friday, AUD/USD managed to keep 0.7000 despite fears of the pandemic. While cases continue to surge in the UK and Europe, not to forget India, Johnson and Johnson Inc. came out with the news suggesting a strong immune response to the coronavirus vaccine with a single dose in the early trial stages. 

Elsewhere, US House Speaker Nancy Pelosi believes, per CNBC, that the COIVD-19 stimulus deal still possible as Democrats prepare a new package.

Furthermore, mixed clues concerning the final round of Brexit talks this week also play their role in determining the market sentiment.

Against this backdrop, Wall Street managed to please the bulls, backed by tech-shares, whereas the US 10-year treasury yields stood depressed near 0.65% by the end of Friday.

Considering the absence of any strong clues that could renew hopes of economic recovery amid the virus woes and the US-China tussle, AUD/USD is less likely to remain strong for long. Though, no major data/events on the calendar can keep traders guessing unless any news hints print the positive signs.

Technical analysis

Having bounced off 100-day SMA, currently around 0.7015/20, AUD/USD buyers can aim for June month’s top near 0.7065. Also acting as downside support could be the 0.7000 psychological magnet.