AUD/USD struggles to defend 2021 bottom around 0.7400 on sour sentiment


  • AUD/USD bears take a breather following the heaviest losses in a month.
  • Mixed Aussie employment figures, sluggish China GDP growth and covid woes weigh on the quote.
  • Powell’s testimony, US data exert additional downside pressure.
  • Risk catalysts stay on the driver’s seat, virus updates, US consumer-centric figures also important.

AUD/USD remains dismal around the yearly low, despite a recent uptick to 0.7430, amid the early Friday morning in Asia. The risk barometer pair aptly portrays subdued market sentiment while also bearing the burden of downbeat data at home, as well as from the largest customer China.

Unlike today, the quote began Thursday on a softer footing as the coronavirus (COVID-19) woes escalated in Australia, pushing Victoria for a lockdown. Also on the negative side were the doubts over Fed Chair Jerome Powell’s support for easy money policies.

The virus-led pessimism got extra support from downbeat Australia Employment Change, +29.1K versus +30.0K expected and 115.2K prior, ignoring the surprise downtick in Unemployment Change to 4.9% from 5.5% forecast and 5.1% previous readouts. Additionally, China’s Q2 GDP eased on YoY even as QOQ figures joined monthly Retail Sales and Industrial Production to battle the bears.

On the other hand, US Philadelphia Fed Manufacturing Index and New York Empire State Manufacturing Index also came in mixed for July whereas the weekly Indian Jobless Claims matched 360K forecasts.

Confusion over the economic conditions of the US, Australia and China teases bears. Further, Fed’s Powell reiterated his bearish bias support no change in monetary policy required whereas St. Louis Fed President Bullard occupied the other side and added to the market’s risk-off mood.

Against this backdrop, the Wall Street benchmark marked another sluggish day and the US 10-year Treasury yields dropped 5.5 basis points (bps) to 1.30% by the end of Thursday’s North American session.

Looking forward, a lack of Aussie data may push AUD/USD traders to look for trans-Tasman figures for fresh impulse in Asia. However, the US Retail Sales and the preliminary readings of the Michigan Consumer Sentiment Index, expected 0.4% for June and 86.5 for July respectively, will be important to watch afterward. Above all, qualitative risk catalysts will be crucial to observe.

Read: US June Retail Sales Preview: Analyzing major pairs' reaction to previous releases

Technical analysis

A horizontal area comprising August­–September 2020 highs and the yearly low around 0.7415-10 becomes the key for sellers. Meanwhile, a three-week-old descending resistance line around 0.7475 and 200-DMA level surrounding 0.7585 challenge the AUD/USD pair’s corrective pullback.

Additional important levels

Overview
Today last price 0.7428
Today Daily Change -0.0053
Today Daily Change % -0.71%
Today daily open 0.7481
 
Trends
Daily SMA20 0.7514
Daily SMA50 0.7653
Daily SMA100 0.7681
Daily SMA200 0.7585
 
Levels
Previous Daily High 0.7487
Previous Daily Low 0.743
Previous Weekly High 0.7599
Previous Weekly Low 0.7409
Previous Monthly High 0.7794
Previous Monthly Low 0.7477
Daily Fibonacci 38.2% 0.7465
Daily Fibonacci 61.8% 0.7452
Daily Pivot Point S1 0.7445
Daily Pivot Point S2 0.741
Daily Pivot Point S3 0.7389
Daily Pivot Point R1 0.7502
Daily Pivot Point R2 0.7523
Daily Pivot Point R3 0.7558

 

 

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