- AUD/USD extended the overnight retracement slide from seven-week tops, 100-DMA.
- Deteriorating global risk sentiment weighed on the perceived riskier currency, the aussie.
- The risk-off mood underpinned the USD’s safe-haven demand and added to the selling bias.
The AUD/USD pair extended its steady decline through the early European session and is currently placed near the lower end of its daily trading range, around mid-0.6400s.
The pair extended the previous day’s retracement slide from seven-week tops, or a resistance marked by 100-day SMA and witnessed some heavy selling for the second straight session on Friday amid deteriorating global risk sentiment.
The latest optimism over the successful stage 1 clinical trial of Gilead Sciences’ antiviral drug remdesivir to treat COVID-19 patients and re-opening of economies in some parts of the world turned out to be short-lived.
Instead, worries over the economic fallout from the coronavirus pandemic again weighed on investors’ sentiment. This was evident from a steep fall in the equity markets, which dampened demand for the perceived riskier Australian dollar.
The risk-off mood further benefitted the US dollar and eased the recent bearish pressure. This, in turn, further collaborated to the pair’s corrective slide to the 61.8% Fibonacci level of the 0.7032-0.5506 downfall.
It will now be interesting to see if the pair is able to attract some dip-buying or the current pullback marks the end of the recent strong recovery move from the vicinity of the key 0.5500 psychological mark, or 17-year lows.
Market participants now look forward to the release of the US ISM Manufacturing PMI. This along with the broader market risk sentiment will play a key role in influencing the pair’s momentum and produce some trading opportunities on the last day of the week.
Technical levels to watch
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