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  • AUD/USD stays depressed after marking the heaviest losses in two months.
  • Risks dwindle amid concerns for Brexit deadlock, virus variant and US stimulus.
  • US-China tension and WTO’s acceptance of Aussie appeal against Beijing also weigh the mood.
  • The preliminary reading of Australian trade figures for November to offer immediate direction, risk catalysts are the key.

AUD/USD stays pressured around 0.7520 during the early Wednesday morning in Asia. The aussie pair dropped the most since late-October the previous day as risks dwindle and the US dollar rallied. While chatters around Brexit, coronavirus (COVID-19) and China can keep the driver’s seat, Aussie trade data for November can also direct near-term moves.

Bears cheer downbeat sentiment, US dollar gains…

As AUD/USD is mostly considered as a risk barometer, challenges to the market’s mood can easily heavy the quote. Brexit, new covid variant and headlines including China recently contributed to the risk-off mood.

While the European Union (EU) policymakers aren’t satisfied with the UK’s relief on fisheries, the level playing field is an extra hurdle to solve before the December 31 deadline. However, nothing major is positive except the matter that the talks aren’t off. On the other hand, the fresh strain of COVID-19 leads multiple countries towards banning British travels even as European authorities and major vaccine producers keep the hopes to combat the virus.

The US announced fresh visa sanctions on Chinese policymakers and signaled that more is on the way for Beijing diplomats. At home, the Aussie complain to the World Trade Organization (WTO) concerning China’s anti-trade attitude towards Australian Barley got accepted by the trade body. This can escalate tension with Canberra’s biggest customer and add to the general risk-off mood too.

While the US dollar gains support from the risk aversion and weigh on the AUD/USD prices, the greenback also benefited from the passage of the multibillion-dollar relief package that has been awaited for a long. That said, the US dollar index (DXY) posted the biggest gains in four months on Tuesday.

Looking forward, risk catalysts can keep the AUD/USD depressed unless any positive surprises while any jump in the Aussie Trade Balance from 7456M prior, or upbeat Imports and Exports, can offer intermediate corrective bounce to the quote.

Technical analysis

Lower high formation since last Thursday joins a daily closing below 10-day SMA to direct AUD/USD prices towards a confluence of 21-day SMA and an upward sloping trend line from November 05, at 0.7470 now. Alternatively, buyers are likely to look for entries beyond the 0.7600 round-figure.