Home Forex Market Analysis Forex Signals AUD/USD Extends Its Early-Day Gains Over 0.7100 – Quick Trade Plan! 

AUD/USD Extends Its Early-Day Gains Over 0.7100 – Quick Trade Plan! 

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The AUD/USD currency pair stopped its early-day gains and took some new offers near the 0.7100 level mainly due to the risk-off market sentiment, triggered by the intensification of tensions between the U.S. and China. Apart from this, the lack of clarity over the much-awaited coronavirus (COVID-19) stimulus bill also exerted downside pressure on the market trading tone, which tends to undermine the perceived riskier Australian dollar and contributed to the currency pair gains. 

Besides, the ever-increasing number of coronavirus cases across the globe also kept the market sentiment under pressure, which provided further discouragement to the currency pair. On the other hand, the broad-based U.S. dollar fresh strength, backed by the market risk-off tone, also weighed on the AUD/USD currency pair. The gains in the U.S. dollar were further bolstered by the U.S. Congress’ progress towards passing the latest $2.2 trillion fiscal stimulus bill. On the contrary, the better-than-expected China PMI data could be considered as one of the key factors that help the currency pair to limits its deeper losses. At the moment, the AUD/USD currency pair is currently trading at 0.7111 and consolidating in the range between 0.7100 – 0.7149.

As we all well aware that the market trading sentiment remains depressed during the Asian trading session as the concern about the second wave of coronavirus infections, leads the lockdown measures to control the outbreak in several countries, which kept the global risk sentiment under pressure. As per the latest report, the global death losses from the COVID-19 pandemic crossed 1 million earlier in the week, and case numbers continue to rise. Thus, the ever-increasing cases of coronavirus across the globe, destroying hopes of any V-shaped economic recovery. This, in turn, urged investors to invest their money into safe-haven assets instead of riskier assets like Aussie.

At the US-China front, the renewed concerns over worsening tensions between the world’s two largest economies over Beijing’s lesser than promised buying of the U.S. goods, which keeps threatening the Sino-American trade deal. This, in turn, exerted downside pressure on the market trading sentiment and contributed to the currency pair losses. Other than the US-China tussle, the tussle between the European and British policymakers over the Brexit trade deal kicked off yesterday.

Additionally, the lack of clarity over the much-awaited coronavirus (COVID-19) stimulus bill also keeps the investors cautious. But the hopes were earlier fueled by the U.S. Congress’ progress towards passing the latest $2.2 trillion fiscal stimulus bill proposed by Democrats on Monday after U.S. House of Representatives Speaker Nancy Pelosi stated that a deal with the Trump White House could be possible by this week.

At the USD front, the broad-based U.S. dollar succeeded to stop its previous session losses and took some fresh bid during the Asian session on the day as investors turned to the safe-haven in the wake of risk-off market sentiment. However, the progress in the U.S. dollar could be limited as the Investors are turning their focus to comments from President Trump and Democrat candidate Joe Biden However, the gains in the U.S. dollar kept the currency pair lower. Whereas, the U.S. Dollar Index that tracks the greenback against a bucket of other currencies rose by 0.05% to 93.977 by 12:53 AM ET (4:53 AM GMT). 

Across the pond, the market trading sentiment was unaffected by the better-than-expected China data, which showed that the recovery in manufacturing had maintained its momentum in the wake of the Covid-19 epidemic, with both the supply and demand surging. At the data front, China’s NBS or government Manufacturing PMI, which focuses on state-owned enterprises with easy access to credit, increased to 51.5 in September from 51 in August, surpassing the estimate of 51.2. 

In the meantime, the NBS Non-Manufacturing PMI, rose to 55.9 in September from 55.2 in August, exceeding the forecast of 52.1 by a significant margin. A reading above 50 indicates development in the economy. However, this positive data becomes the key factor that helps the currency pair to limit its deeper losses. Looking forward, the market traders will keep their eyes on the USD price dynamics and coronavirus headlines, which could play an important role in managing the intraday momentum. Meanwhile, the FOMC Member Kashkari Speaks and FOMC Member Bowman Speaks will be key to watch on the day.


Daily Support and Resistance

S1 0.6878

S2 0.6959

S3 0.6994

Pivot Point 0.704

R1 0.7075

R2 0.7121

R3 0.7202

The AUD/USD has violated the double top resistance level of 0.7082 and the bullish crossover of this level makes 0.7082 a support for the AUD/USD pair. On the higher side, the AUD/USD pair may go after the next resistance area of 0.7115 level. Conversely, the bearish breakout of 0.7065 may drive further selling until 0.7014. Bullish bias seems stronger today. Check out a trading plan below…

Entry Price – Buy 0.71358

Stop Loss – 0.70958

Take Profit – 0.71758

Risk to Reward – 1:1

Profit & Loss Per Standard Lot = -$400/ +$400

Profit & Loss Per Micro Lot = -$40/ +$40

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