The AUD/USD pair was closed at 0.76953 after placing a high of 0.77604 and a low of 0.76658. AUD/USD pair dropped on Monday amid the rising US dollar prices and the improved risk-off market sentiment in the market. The risk-sensitive Australian dollar suffered due to the rising risk-off market sentiment after the world’s second-largest economy entered into restrictions as the number of coronavirus cases rose rapidly. China saw almost 18 new imported infections from overseas, and on Monday, the country in northeastern Heilongjiang province moved into lockdown after reporting new coronavirus infections. It weighed on the risk sentiment that ultimately plunged the risk-sensitive Aussie and dragged the pair AUD/USD on the downside.
The China proxy-Aussie suffered more due to its trading relationship with China as the country imposed strict anti-virus measures in the Hebei province due to rising coronavirus cases. It also harmed the risk-sensitive currency Aussie that ultimately added losses in AUD/USD pair. On the data front, at 05:00 GMT, the MI Inflation Gauge for December from Australia raised to 0.5% in comparison to November’s 0.3%. At 05:30 GMT, the Retail Sales for November from Australia raised to 7.1% against the forecasted 7.0% and supported the Australian dollar that capped further downside in the AUD/USD pair.
Meanwhile, the data from China also impacted the prices of the AUD/USD pair. In December, the CPI from China raised to 0.2% against the expected 0.0% and supported China-proxy Aussie. The PPI from China came in as -0.4% against the expected -0.7% and supported the China-proxy Australian dollar that ultimately limited the AUD/USD pair’s rising prices.
The US dollar was also strong on the board as the US treasury yields continued to rise on Monday. The US Dollar Index was also up to 90.50 level on Monday, followed by declining to the two-year lowest level last week and supporting the AUD/USD pair’s downward momentum on Monday. Aussie traders will remain reluctant to place a buying position in AUD/USD pair as the market sentiment was deteriorated due to the rising coronavirus cases around the globe that would hurt the risk-sensitive Aussie.
Daily Technical levels
Pivot Point: 0.7734
The AUD/USD pair has bounced off over the 0.7690 level, forming a bullish engulfing candle on the 2-hour timeframe. It may bounce off to trade until the 0.7740 level, where 10 & 20 periods EMA are likely to extend resistance at 0.7740. On the lower side, the AUD/USD may find support at the 0.7690 level. A bearish breakout of 0.7690 level can extend the selling trend until the next support area of 0.765 level today. Good luck!