AUD/USD whipsaws below 7-week highs at 0.6570

The Australian dollar might be about to put an end to a six-day rally from 0.6257 after reaching multi-week highs at 0.6570 earlier today. The AUD/USD has been rejected at 0.6560 area twice over the last sessions and is trying to consolidate above 0.6500.

The aussie fails to benefit from dollar weakness

The Australian dollar is losing ground on the day despite the US dollar’s broad-based vulnerability. The Dollar Index, which measures the value of the USD against the main traded currencies has dropped to two-week lows on Thursday, weighed by downbeat US data. The negative US personal spending and jobless figures have increased market concerns about the consequences of the COVID-19 shutdown.

The recent rally, fuelled by hopes of Australia leading the major economies on lifting Coronavirus restrictions seems to be losing steam. A quick look to the 4-hour charts show the pair breaking below the bullish trendline support of the last six days, now acting as resistance around 0.6560/70.

AUD/USD: Back to 0.62-0.63 or below ­­ – Westpac

FX strategists at Wespac warn that the global impact of COVID-19 is likely to dampen market sentiment over the coming weeks, dragging the AUD with it: “Risk appetite will at least become more two-way in coming weeks as awful economic and earnings data hits in waves around the world. Loosening of restrictions will be mostly very tentative and the prospect of second waves of infections or weak recoveries should undermine equities and in turn, AUD (…) We would look to sell into AUD/USD in the high 0.65s, with 0.62-0.63 achievable multi-day/week.”