AUD/USD trims losses as indicators signal oversold conditions

The AUD/USD pair has recovered slightly from session lows with technical charts reporting oversold conditions but remains largely on the offer despite the decision by the Australian lawmakers to announce massive stimulus measures. 

The pair is currently trading near 0.5760, representing a 0.70% drop on the day, having declined from 0.5825 to 0.5698 in early Asia. The Australian currency has dropped by nearly 12% so far this month on fears of a coronavirus-led global recession. 

The sharp slide is looking overdone as per technical indicators. For example, the 14-day relative strength index is hovering well below 30, a sign the currency is extremely oversold. Technical indicators, however, can remain oversold longer than bargain hunters can stay solvent in a strong downward trending market. 

Australia's government on Monday announced a second major economic rescue package worth $66 billion, on top of an initial $17.6 billion package and more than $100 billion in emergency banking measures to prevent against a credit freeze, according to The Guardian. 

So far, however, that has failed to put a floor under the Australian stocks, which are down over 7% at press time and trading at the lowest level in eight years. Other Asian equities and the futures tied to the S&P 500 are also flashing red. 

As a result, the bounce seen in the AUD over the last few minutes could be short-lived and the pair may revisit Thursday's low of 0.5506 during this week. 

Technical levels