AUD/USD: Coronavirus woes slow down bulls below 0.7000


  • AUD/USD stays depressed after taking a U-turn from monthly top of 0.6998.
  • A return to lockdown in Melbourne, over three million cases in the US portray the coronavirus resurgence.
  • RBA’s economic worries join US dollar recovery to snap the aussie pair’s six-day winning streak.
  • No major data at home or from China highlights virus headlines, risk catalysts as the key.

AUD/USD kick-starts Wednesday’s trading session by struggling to extend the latest recovery moves from 0.6938 while taking rounds to 0.6950. The quote snapped a multi-day run-up the previous day while reversing from 0.6998. However, its following recovery moves from 0.6921 failed to last longer than 0.6979.

The coronavirus (COVID-19) resurgence in top-tier global economies, including Australia, recalls the fear trades and dragged the risk barometer the previous day. Also portraying the sentiment was the US dollar index (DXY) which bounced off a two-week low amid upbeat data and safe-haven demand. Furthermore, RBA’s grim economic outlook added weakness into the AUD/USD pair on Tuesday.

Pandemic plays it hard…

Be it a six-week lockdown in Melbourne and surrounding cities or record-breaking virus figures from the US, crossing three million mark, global economies have recently been hit by the pandemic’s resurgence. Additionally, Tokyo marked over 100 cases for the fifth day in a row whereas situations in India are also worrisome. On the contrary, Beijing registered zero cases while also announcing a third trial of the vaccine in Brazil. However, the US health official Dr. Fauci has poured cold water on the face of expectations that any cure can stop the pandemic.

Elsewhere, the US-China tussle remains on the table with the recent announcement from US Secretary of State Mike Pompeo stating visa restrictions for some Chinese officials over Tibet. Furthermore, the dragon nation keeps its hard stand against American and the UK when it comes to opposing the ban on Huawei and fighting against the Hong Kong security law.

Amid all these plays, Wall Street bulls catch a breather after the previous day’s stellar performance while the US 10-year Treasury yields also revisited sub-0.65% area, down 4.4 basis points (bps).

It should also be noted that the Reserve Bank of Australia (RBA) announced no change to its record low interest rate of 0.25% and earlier announced Quantitative Easing (QE) during the July month’s monetary policy meeting. However, the central bank cited economic fears, due to the deadly disease, while also showing readiness to keep the policies easy for the time being. On the other hand, upbeat US JOLTS Job Openings, 5.397M versus 4.85M expected, offered additional support to the greenback.

Looking forward, a light economic calendar highlights the virus headlines and Sino-American news as the key catalysts.

Technical analysis

Tuesday’s bearish spinning top signals the traders’ indecision but the pair’s sustained trading above key SMAs, the 21-day SMA level around 0.6900 being the nearest support, keeps buyers hopeful. Though, 0.7000 threshold becomes important to watch for fresh long positions.

Additional important levels

Overview
Today last price 0.6948
Today Daily Change -25 pips
Today Daily Change % -0.36%
Today daily open 0.6973
 
Trends
Daily SMA20 0.6902
Daily SMA50 0.672
Daily SMA100 0.6515
Daily SMA200 0.6672
 
Levels
Previous Daily High 0.6988
Previous Daily Low 0.6929
Previous Weekly High 0.6953
Previous Weekly Low 0.6832
Previous Monthly High 0.7065
Previous Monthly Low 0.6648
Daily Fibonacci 38.2% 0.6965
Daily Fibonacci 61.8% 0.6951
Daily Pivot Point S1 0.6939
Daily Pivot Point S2 0.6904
Daily Pivot Point S3 0.688
Daily Pivot Point R1 0.6998
Daily Pivot Point R2 0.7023
Daily Pivot Point R3 0.7057

 

 

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