AUD/USD in the throes of a healthy bearish correction

• AUD/USD bulls are tiring at a critical resistance zone, focus is on the downside.  
• The US dollar may have some room to go until the next major resistance.  

AUD/USD is currently trading at 0.7277 having travelled between a range of 0.7318 and a low of 0.7260, somewhat under pressure from both a technical  and fundamental perspective.  

The US dollar has pushed on higher to complete a 78%  retracement  of the latest daily drop and bearish impulse in the DXY.

The  optimism about a potential coronavirus vaccine was offset by worries about how the drug will be stored and administered at a time when the US needs it the most.  

According to a study by covidexitstrategy.org, nearly every US state is now classified as having an uncontrolled spread of the virus.    

Markets presume that central banks and governments will have to keep fiscal and monetary policies uber-easy.

The eruption in volatility caused by this week’s positive vaccine news from Pfizer/BioNtech had initially sunk the dollar before markets realised that it could mean less stimulus over a shorter time frame as the news injected urgency into the reflation trade.

However, from a technical standpoint, the dollar is somewhat overstretched.

If the market maintains the opinion that the Federal Reserve will remain uber easy and that under a Democratic ruling at the White House, fiscal stimulus will be pumped to higher than potentially anticipated levels, a  move out of USDs and into high yield currencies is likely to lend support to the  commodity complex, including the Aussie.  

On the other hand, the Aussie has recently felt some pressure from the RBA’s extended policy measures which could continue to be felt over the coming weeks.

AUD/USD  technical analysis

The price is at a strong level of resistance and could be due to a correction prior to the next bullish impulse.