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  • AUD/USD begins the week with a downside gap of over 30 pips.
  • Netherland, Australia has one case each of new covid variant, WHO is in close contact with the UK.
  • EU less likely to ratify Brexit deal in 2020 amid differences over fisheries, level playing field.
  • US aid package up for voting in the Congress, PBOC rate decision will also be eyed.

AUD/USD begins the week’s trading with a downside gap to 0.7587, currently around 0.7585, amid risk-negative headlines from the UK. In doing so, the Aussie pair pulls back from the highest since the mid-2018 while paying a little heed to the US coronavirus (COVID-19) stimulus developments.

While the new variant of the COVID-19 leads to the Tier-4 lockdown in London and Southeast England, one case of each of the infections could also be found in Australia and Netherlands. The same push the World Health Organization (WHO) to stay in “close contact” with the British government to not repeat the covid outbreak. During the weekend, European countries including France and Germany turned down the UK travels while Turkey followed the suit afterward.

Not only the virus woes but Brexit are also weighing on the market sentiment, which in turn heavies the AUD/USD, as a deadlock over the trade deal talks hint extension of the negotiations in 2021. The European Union (EU) and the UK agreed over the majority of the key hurdles during the last weeks but fisheries and level playing remain their biggest sticking points.

As per the latest tweet from First Minister of Scotland Nicola Sturgeon, “It’s now imperative that PM seeks an agreement to extend the Brexit transition period. The new Covid strain – & the various implications of it – means we face a profoundly serious situation, & it demands our 100% attention. It would be unconscionable to compound it with Brexit.”

Elsewhere, US Congress members are moving fast towards voting on the fiscal relief. CNN’s Manu Raju recently tweeted that US House Speaker Nancy Pelosi insists on voting on Sunday.

That said, updates on Brexit, covid strain and US stimulus become the key drivers. However, the People’s Bank of China’s (PBOC) rate decision, up for 01:30 AM GMT, also can move the AUD/USD prices in case of any surprises as China is still Australia’s biggest customer.

Technical analysis

While 10-day SMA near 0.7560 offers immediate support, an ascending trend line from November 02, at 0.7540 now, also challenges AUD/USD sellers. Meanwhile, buyers will wait for a fresh high beyond 0.7640 while thinking to return.