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AUD/USD flirts with session lows, just above 0.7100 mark

  • A goodish pickup in the USD demand prompted some fresh selling around AUD/USD on Monday.
  • A combination of factors weighed on investors’ sentiment and benefitted the safe-haven USD.
  • Some follow-through selling below the 0.7100 mark should pave the way for additional weakness.

The AUD/USD pair edged lower through the Asian session and was last seen hovering near the lower end of its daily trading range, just above the 0.7100 mark.

The pair witnessed some fresh selling on the first day of a new trading week and erased the previous session’s positive move to seven-day tops, around the 0.7157 region. A turnaround in the global risk sentiment benefitted the safe-haven US dollar and turned out to be a key factor that weighed on the perceived riskier Australian dollar.

The global risk sentiment took a hit on Monday amid growing market worries that the second wave of the coronavirus infections could hinder the global economic recovery. This comes on the back of uncertainty over the US fiscal stimulus measures and the US political uncertainty, which forced investors to take refuge in the safe-haven greenback.

The US House Speaker Nancy Pelosi remained optimistic on the stimulus talks and said on Sunday that she expected a White House response on Monday regarding the spending plan. Investors, however, seemed unconvinced that US lawmakers will be able to strike a deal before the US presidential election amid strong opposition from Senate Republicans.

Meanwhile, the AUD/USD pair, for now, seems to have snapped three consecutive session’s of the winning streak and a sustained break below the 0.7100 mark should pave the way for additional intraday weakness. The pair might then accelerate the fall back towards the 0.7045 intermediate support before aiming back to challenge the key 0.7000 psychological mark.

Market participants now look forward to the US economic docket, featuring the only release of New Home Sales figures. The data, along with the broader market risk sentiment, US stimulus headlines and developments surrounding the coronavirus saga, will influence the USD price dynamics. This, in turn, will produce some meaningful trading opportunities around the AUD/USD pair.

Technical levels to watch

 

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