AUD/USD hits fresh seven-week lows sub-0.7600 as risk-aversion remains at full steam

• AUD/USD extends Tuesday’s 1.50% slump as King dollar rules.
• Risk-aversion remains at full steam amid covid, vaccine and China concerns.
• All eyes remain on the US data dump and day 2 of Powell’s testimony.

AUD/USD battles 0.7600 in Wednesday’s Asian trading, having reached the lowest levels in seven weeks below that level in the last minutes.

The spot looks to extend Wednesday’s 1.50% sell-off, as the prevalent risk-off action in global markets continues to underpin the haven demand for the US dollar.

A number of factors remain in play so far this week that threatens the global economic recovery, denting the appetite for riskier assets such as the aussie.

Amongst the firsts is the strengthening third wave of coronavirus in Europe while worries over the covid vaccines’ side effects have led many key economies to halt their inoculation campaigns.

Adding to the markets’ nervousness, growing China worries, in light of the US, European Union (EU), UK and Canada having sanctioned Chinese official against the human right abuses, weigh on the aussie dollar.

Meanwhile, the latest Bloomberg report, citing that Beijing has fallen short of meeting is US purchases target as agreed on in the phase one trade deal, collaborates with the downside in the major.

Markets ignore upbeat Australian trade data and Manufacturing PMI release, as the weakness in the Kiwi also continues to remain a drag on the Antipodean.

Looking ahead, a slew of critical macro news from the US will be closely eyed ahead of day 2 of the Fed Chair Jerome Powell’s testimony. On Tuesday, Powell reiterated that an expected near-term spike in inflation will be transitory.

AUD/USD: Technical outlook

“While a clear break of a three-month-old ascending trend line portrayed the heaviest AUD/USD drop in a month, 100-day SMA currently challenges the bears around 0.7600. Hence, a corrective pullback towards the previous support line near 0.7670 can’t be ruled out unless the quote holds 0.7600, a break of which will eye the yearly bottom around 0.7560,” FXStreet’s Anil Panchal notes.

AUD/USD: Additional levels