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  • AUD/USD consolidated last week’s strong positive move to one-month tops.
  • Concerns over coronavirus, the risk-off mood kept a lid on any strong gains.
  • The downside remains cushioned amid a weaker tone surrounding the USD.

The AUD/USD pair lacked any firm directional bias and remained confined in a narrow trading band, around mid-0.6300s through the early European session.

A combination of diverging forces failed to assist the pair to build on last week’s strong positive move of over 370 pips to one-month tops and led to subdued consolidative price action for the second straight session.

The US dollar remained depressed in the wake of the Fed’s announcement last week to provide additional loans of up to $2.3 trillion to support the economy and softer-than-expected US consumer inflation figures released on Friday.

The supporting factor was negated by a fresh wave of the global risk-aversion trade, which held investors from placing aggressive bullish bets around the perceived riskier Australian dollar and kept a lid on any meaningful gains.

The global risk sentiment took a hit on the first day of a new trading week after China reported the highest number of new daily cases in nearly six weeks and fueled fears about the second round of COVID-19 outbreak.

Investors also seemed reluctant amid relatively thin liquidity conditions on the back of Easter Monday holiday in most European markets and preferred to wait for a fresh catalyst before positioning for the pair’s next leg of a directional move.

Developments surrounding the coronavirus saga might continue to play a key role in influencing the broader market risk sentiment and produce some meaningful trading opportunities in the absence of any major market-moving economic releases.

Technical levels to watch