- AUD/USD slumps during the New York session, down almost half percent.
- Increasing COVID-19 cases in Eastern Europe, Austria's lockdowns, and Germany's possibility of reimposing restrictions dampened investors' mood.
- AUD/USD Technical outlook: Negative below the downtrend at 0.7577 – Commerzbank.
The AUD/USD extends its three-week slump, a 300pip slump, trading at 0.7243 during the New York session at press time. In the overnight session, the Australian dollar tried to pare some of its weekly losses. However, it failed to break the robust resistance area near the R1 daily pivot point level, retracing down to 0.7228, breaking support levels on the way down.
The risk-off mood in the market dampened the prospects of risk-sensitive currencies like the AUD, the NZD, and the GBP. Contrarily, safe-haven peers like the Japanese yen and the greenback are the winners of the day. Factors like the fourth-wave COVID-19 cases spike in Eastern Europe, alongside Germany, spurred demand for the US dollar.
Meanwhile, the US Dollar Index advances at press time, closing to the 96.00 figure, on Federal Reserve Vice-Chairman Richard Clarida's comments that may be appropriate in December to discuss speeding QE taper. He added that there are upside risks to inflation, that the economy is in a very strong position at that it looks as though Q4 is going to be very good.
AUD/USD Price Forecast: Negative below the downtrend at 0.7577 – Commerzbank
According to Karen Jones, Team Head FICC Technical Analysis at Commerzbank, the aussie would decline towards the August low at 0.7106 on a break below 0.7250.
She added, "failure at 0.7250 will target the 29th September low at 0.7171 and the August low at 0.7106." Further noted that "Initial resistance is the 55-day ma at 0.7348 then 0.7430 the 9th November high and the 20-day ma at 0.7409. Above here lies the 0.7477 3rd September high, and we look for the market to fail in this vicinity." Jones further noted that long-term bearish pressure would be maintained below the 0.7534/77 area.
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