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  • AUD/USD remained heavily offered for the second straight session on Monday.
  • Concerns about coronavirus kept exerting pressure on the China-proxy aussie.

The AUD/USD pair continued losing ground through the mid-European session and dropped to near two-month lows, around the 0.6775-70 region in the last hour.

The pair extended its recent bearish trend and recorded some heavy losses on the first day of a new trading week. Concerns over the outbreak of the deadly coronavirus turned out to be one of the key factors weighing on the China-proxy Australian dollar.

Aussie weighed down by risk-off mood

Meanwhile, market worries that authorities might be struggling to contain the outbreak of the virus triggered a fresh wave of the global wave of risk-aversion trade, which exerted some additional pressure on perceived riskier currencies – like the aussie.

The bearish momentum seemed rather unaffected by a subdued US dollar price action. As investors looked past Friday’s upbeat US Services PMI, the anti-risk flow-led slump in the US Treasury bond yields kept the USD bulls on the defensive.

Monday’s steep decline to the lowest level since early January could further be attributed to some technical selling on a sustained break below a short-term ascending trend-line extending through early October and late November swing lows.

Hence, some follow-through weakness, towards testing November lows around the 0.6755 region, now looks a distinct possibility. However, oversold conditions on short-term charts might help limit deeper losses amid absent relevant market-moving economic releases.

Technical levels to watch