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  • A combination of factors led to an intraday turnaround for AUD/USD from the 0.7000 mark.
  • Concerns about rising COVID-19 cases helped revive demand for the safe-haven greenback.
  • Fresh lockdown measures in Australia undermined the aussie and added to the selling bias.

The AUD/USD pair extended its retracement slide from four-week tops and dropped to fresh session lows, around the 0.6925-20 region in the last hour.

The pair stalled its recent positive move witnessed over the past one week or so and faced rejection near the key 0.7000 psychological mark on Tuesday. The pullback was sponsored by a combination of factors, including worries over rising coronavirus cases and reviving demand for the US dollar.

Despite the incoming positive economic data, investors remain concerned about the ever-increasing number of COVID-19 cases across the world. This coupled with the possibility of renewed lockdown measures to contain the spread dampened prospect for a sharp V-shaped global economic recovery.

This, in turn, took its toll on the global risk sentiment, which underpinned the safe-haven USD and drove flows away from the perceived riskier aussie. The Australian dollar was further pressured by the announcement of a six-week lockdown in Australia’s second-most populous state – Melbourne.

Meanwhile, the latest RBA monetary policy decision announced this Tuesday did little to provide any impetus or influence the AUD/USD pair’s momentum. The Australian central bank held benchmark rates unchanged at a record low level of 0.25% and referred to economic risks in the accompanying statement.

The AUD/USD pair has now erased the previous day’s positive move and any subsequent slide below the 0.6900 round-figure mark will indicate that the recent positive move might have already run out of the steam. Bears might then aim back to retest horizontal support near the 0.6840-30 region.

In the absence of any major market-moving economic releases from the US, the USD price dynamics and developments surrounding the coronavirus saga will be looked upon for some short-term trading opportunities on Tuesday.

Technical levels to watch