The AUD/USD pair was closed at 0.71185 after placing a high of 0.71461 and a low of 0.71025. The AUD/USD pair fell on Monday and gave a bearish candle for the day. The AUD/USD pair struggled to find a direction throughout Monday however it pared to its losses amid the broad-based US dollar strength in late American hours. The risk-averse market sentiment after the rising number of coronavirus cases across the globe and the deadlock over the US stimulus package caused a surge in the greenback due to its safe-haven status.
The US Dollar Index was up by 0.30% to above 93 levels on Monday that ultimately weighed on AUD/USD pair. The US dollar was gaining on the back of increasing cases of coronavirus from Europe and other nations. Europe was hit hardest by the second wave of coronavirus as most European nations started re-imposing restrictions to curb the effects of the coronavirus crisis.
France reported more than 50,000 cases in a single day over the weekend and introduced a nationwide curfew. Spain also introduces a curfew for six months on Monday along with Italy. The rising number of countries introducing restrictive measures to control the damage of coronavirus raised questions on the economic recovery as the economies were still struggling through the previous effects of lockdowns.
These rising uncertainties increased the appeal for safe-haven that ultimately diminished the risk sentiment in the market and weighed on riskier Aussie that dragged the AUD/USD pair on the downside. On the data front, at 19:00 GMT, the US economic docket released the New Home Sales that dropped to 959K from the expected 1025K and weighed on US dollar that capped further losses in AUD/USD pair on Monday.
The Australian Dollar was also under pressure because of the last week’s latest decision of the Reserve Bank of Australia (RBA) to cut its cash rate to 0.1%, the lowest in history. The bank decided to cut its interest rates to the lowest level as the country was struggling to fight the coronavirus crisis impact on its economy. The strength of Aussie and the local economic downturn after Victoria’s lockdown pushed RBA to cut its cash rates to 0.1%.
As the Australian Dollar was already under pressure, the strength of the US dollar along with the dampened risk sentiment in the market weighed on AUD.USD pair on Monday and dragged its prices below 0.72000 level.
Daily Technical Levels
Pivot point: 0.7130
The AUD/USD is trading with a selling bias at the 0.7120 level, facing an immediate resistance around the 0.7149 area. Below 0.7149, we may see AUD/USD pair to drop until the next support area of 0.7105 as the MACD and EMA are in support of selling. Checkout a trading plan below…
Entry Price – Sell 0.71293
Stop Loss – 0.71693
Take Profit – 0.70893
Risk to Reward – 1:1
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$40/ +$40
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