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  • AUD/USD’s bounce to remain capped amid risk-aversion.
  • US-China trade woes and coronavirus resurgence to dent risk.
  • Dollar strength to extend ahead of the US macro news.

Fresh bids emerged once again just above 0.6850, allowing a tepid bounce in AUD/USD heading into early European trading, although the bulls appear to lack the commitment.  

Amid a minor recovery in the Asian stocks and US equity futures, the US dollar has retreated from multi-day highs against its major peers, offering some support to the aussie bulls.

Stabilizing risk sentiment cushions the downside bias in the higher-yielding currencies such as the AUD. Markets are awaiting the sentiment on the European markets for a fresh trading impetus.

Meanwhile, a sense of cautious will likely prevail amid escalating US-China trade tensions after White House threatened retaliatory tariffs on China if the country doesn’t import enough US lobsters.

The aussie traders could also weigh in the concerns over the surge in the coronavirus cases in the Australian state of Victoria while the greenback will continue to draw the haven bids from the second-wave of the virus strengthening its grip in the US states.

All in all, the upside attempts are likely to get sold-off into the risk-off environment, as virus fears will continue haunting the market ahead of the US Durable Goods, Q1 GDP revision and Jobless Claims data.

AUD/USD technical levels