Search ForexCrunch
  • Risk aversion weighs on the Australian dollar while USD remains weak on Fed rate cut expectations. 
  • AUD/USD upside limited by 0.6635 again, retreats under 0.6600. 

The AUD/USD pair approached weekly highs but it found resistance at 0.6635 and turned to the downside. The pair erased losses and bottomed at 0.6582. Near the ends of the American session it is hovering around 0.6590, consolidating modest losses for the day. 

The greenback lost ground against main European currencies and the yen but it strengthened against commodity and emerging markets on the back of risk aversion. Equity prices in Wall Street were falling more than 2.50%. “Markets failed to hold onto yesterday’s better tone as news of the spread of COVID-19 in Europe and the US continued. Risk liquidation and demand for safe-haven assets resumed”, explained ANZ analysts. 

“Pressure for the Fed to act again in March is huge and we expect the ECB to act next week, while incoming BoE Governor, Andrew Bailey, could cut rates before the 26 March MPC meeting”, added analysts at ANZ. 

On Friday, during the Asian session, January’s retail sales are due in Australia. Later during the day, at 12:30 GMT the US official report will be released. Market consensus point to an increase in payrolls of 175K. 

Short-term Levels to watch 

On the upside, a recovery above 0.6615 could strengthen AUD/USD for another test of 0.6635. While under 0.6580, the pair should weaken further. Support levels might be seen at 0.6560 and 0.6535.