The AUD/USD currency pair extended its early-day gains and rose to a session high closer to the 0.7000 regions. However, the reason for the bullish bias in the currency pair could be attributed to the modest upbeat trading sentiment backed by the vaccine success, which underpinned the perceived riskier Australian dollar and contributed to the currency pair gains.
The mild positive tone around the global equity markets undermined demand for the safe-haven U.S. dollar and prolonged some support to the perceived riskier Australian dollar. However, the risk-on market sentiment was being supported by the success of the vaccine. Although, the hopes of vaccine success increased after Moderna’s potential vaccine produced a “robust” immune response in all 45 patients in its early-stage human trials, providing more promising data that the vaccine may give some protection against the coronavirus. Moreover, the risk-on market sentiment was further supported by the hope of additional stimulus by governments worldwide, partly which overshadowed concerns about the ever-increasing coronavirus case and worsening US-China relations.
Talking about the worsening relation among the world’s top two economies, the U.S. policymakers are considering imposing a travel ban on all Chinese Communist Party members. As per the White House Chief of Staff, Mark Meadows, the Trump administration is studying national security risks of TikTok, WeChat, and other apps that allow a foreign adversary to gather information on users. These U.S. statements could fuel tensions between China & U.S. disputes and weigh on AUD/USD currency pair.
As per data from Johns Hopkins University, in the latest numbers, more than 13.5 million people across the world have been diagnosed with COVID-19. However, the virus-related report has raised concerns among investors that the virus was far from over, and these concerns dampened hopes of economic recovery. The coronavirus concerns considered as one of the key factors that capped the currency pair further gains.
In the absence of the major data/events on the day, the market traders will keep their eyes on the USD price dynamics and coronavirus headlines, which could play a key role in influencing the intraday momentum. The traders will keep their eyes on the virus updates and news concerning China. Though, the U.S. Michigan Consumer Sentiment Index, expected 79.00 against the previous 78.1, could offer intermediate moves.
The AUD/USD has crossed below 50 periods EMA at a level of 0.6975, and below this, the next support is expected to be found around a level of around 0.6960. Since the AUD/USD has formed a downward channel, we can expect a bearish breakout in the pair, leading Aussie dollar towards the next support area of 0.5950 and 0.5935. But in any case, the bullish breakout of 0.6993 level will be bad for our signal, and we may end up at stop loss. Check out the signal below…
Entry Price – Sell 0.69808
Stop Loss – 0.70208
Take Profit – 0.69408
Profit & Loss Per Standard Lot = -$400/ +$400
Profit & Loss Per Micro Lot = -$40/ +$40
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