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  • AUD/USD on the defensive following rejection just above 0.7000.
  • Souring Australia-China relations, broad USD bounce weigh.
  • A weekly closing below 0.70 is a sign of caution for AUD bulls.        

AUD/USD is trying another run to regain the 0.70 handle in European trading, having bounced-off daily lows of 0.6962.

Having failed another attempt to sustain above the 0.7000 psychological level earlier in the Asian session, sellers took over and downed the spot nearly 40-pips to hit a daily low of 0.6962.

The main catalyst behind the fall in the aussie was the souring relationship between close trade partners China and Australia. Beijing accused Australia of endorsing racial discrimination against Asians.

Meanwhile, Australia’s Trade Minister Simon Birmingham said that it is very disappointing that China remains unresponsive to its weeks-long pleas to ease tensions, which started out after the former called for a coronavirus inquiry on Beijing.

Further, broad-based US dollar recovery, in light of the outstanding US NFP report and mellowing risk tone, dented the sentiment around the major. The US dollar index recovered to 96.97, having hit a daily low of 96.71.

However, the last hour, the resource-linked aussie is attempting a tepid bounce on account of the solid rally staged by oil and gold prices. Oil prices are cheering the OPEC+ oil output cuts extension by a month while gold prices are correcting towards 1700 mark following last Friday’s sell-off.

The focus now remains on the sentiment across the global markets, tied to economic recovery hopes, as investors look to the FOMC decision for a fresh direction in the US dollar.

AUD/USD technical levels to watch