AUD/USD pressured below 0.66 handle and 2020's VPOC

AUD/USD is currently trading a 0.6586, down 0.88% at the time of writing having travelled in a wide range between 0.6684 and 0.6314 pertaining to the market open's volatility and coronavirus crisis. 

AUD/USD has struggled to keep above 2020's volume point of control around 0.6598 despite prospects of the Federal Reserve slashing rates to zero in a bid to combat US stocks moving into official bearish territory and to avoid an economic recession. This made for a 10-year AU-US spread to show AUD with yield advantage for the first time since Jan '18, propelling AUD/USD through to the aforementioned highs in the open.  

However, the DXY is now at the weekly/monthly trendline support and given how much the Fed is priced in already and how far the dollar has fallen, a phase of consolidation has ensued, encouraging profit-taking and the market's reflection of the wider implications for global recessions and subsequent presumed action from other central banks. 

"While the outlook for the USD has been eroded this week on the back of expectations that the Fed may carry on easing, we expect that the liquidity and transactional attractions of the USD is likely to bring support during the duration of the current crisis," analysts at Rabobank argued who, in addition, pointed out the vulnerability of the Australian economy when considering last week's -0.3% MoM Retail Sales data. 

Eyes on RBA and QE

The Reserve Bank of Australia is in the pipeline for lowering rates again following last week's 25 basis point cut to a record low of 75 bps. Another next 25 bps move will send rates to a floor of 0.25% before we are looking down the dreaded QE option that will become the policy option of choice for the Australian central bank. This leaves the Aussie vulnerable as we head towards the April meeting where markets will price some form of quantitative easing.

AUD/USD levels

• AUD/USD Forecast: Technicals show positive signs but Aussie could suffer amid risk aversion