AUD/USD flirts with 0.7300 amid mixed clues


  • AUD/USD kick-starts the week with a downside gap of nearly 10 pips.
  • Risks sour as Treasury-Fed tussle joins increasing covid cases.
  • Vaccine hopes, gradual reduction in Australia’s virus-led restrictions stand positive for the pair.
  • Preliminary activity numbers for November can offer extra entertainment.

Having dropped to 0.7302 at the start of the week’s trading in Asia, AUD/USD wavers around 0.7300 during the initial hour of movement. The aussie pair cheered the US dollar weakness, coupled with improvement in the coronavirus (COVID-19) conditions at home, on Friday. However, the broad pessimism concerning the covid resurgence and the tension between the US Federal Reserve and Treasury Secretary Steve Mnuchin capped the pair.

Bulls and bears jostle amid US dollar weakness…

Although mixed catalysts question the AUD/USD pair traders off-late, the broad US dollar weakness has been favoring the quote. Among the many factors that negatively affect the USD, the COVID-19 outbreak has been the major one. As per the latest update from the Wall Street Journal (WSJ), new daily infections in the US fall on Saturday by 17,990 from a daily record set Friday. However, the hospitalization continues to set records every day since November 10.

Other than the COVID outbreak, the tension between the US Treasury and the Fed, relating to the recall of $500 billion provided for emergency lending programs, also weigh on the market’s risk-tone.

On the positive side, Australia has recently started taking back the virus-led activity restrictions while also suggesting additional fiscal help to the companies at home. Recent comments from the Aussie Treasurer Josh Frydenberg indicate an extension to the business tax break. Furthermore, Joe Biden’s close reach to the White House also offers a distant positive for the markets.

Against this backdrop, Wall Street closed in red while the US 10-year Treasury yields also dropped 3.1 basis points (bps) to 0.824% by the end of Friday.

Looking forward, risk catalysts like virus updates and hints for stimulus, coupled with the latest tension in the US relating to the $500 billion recall, will keep the driver’s seat. However, the preliminary prints of the November month’s activity numbers can offer immediate direction. Among them, the Commonwealth Bank’s (CBA) PMIs will become the first ones to watch.

Technical analysis

Although a one-week-old symmetrical triangle, on 4H, restricts AUD/USD moves between 0.7320 and 0.7265, the monthly high and the previous support line stretched from November 02, around 0.7340/45, becomes a tough nut to crack for buyers. Meanwhile, a downside break of 0.7265 can quickly drag the quote to 0.7220 horizontal support comprising November 12 low and high marked on November 04.

Additional important levels

Overview
Today last price 0.7303
Today Daily Change -7 pips
Today Daily Change % -0.10%
Today daily open 0.731
 
Trends
Daily SMA20 0.7207
Daily SMA50 0.7178
Daily SMA100 0.7167
Daily SMA200 0.684
 
Levels
Previous Daily High 0.7324
Previous Daily Low 0.7266
Previous Weekly High 0.734
Previous Weekly Low 0.7254
Previous Monthly High 0.7244
Previous Monthly Low 0.7002
Daily Fibonacci 38.2% 0.7302
Daily Fibonacci 61.8% 0.7288
Daily Pivot Point S1 0.7276
Daily Pivot Point S2 0.7241
Daily Pivot Point S3 0.7217
Daily Pivot Point R1 0.7334
Daily Pivot Point R2 0.7359
Daily Pivot Point R3 0.7393

 

 

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