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  • AUD/USD Failed to capitalize on its early uptick and refreshed session lows in the last hour.
  • A sudden pickup in the USD demand was seen as a key factor that prompted some selling.
  • The downside remains cushioned, at least for now, amid a strong rally in the equity markets.

The AUD/USD pair fell over 50 pips during the early European session and refreshed daily lows, around the 0.6315 region in the last hour.

The early optimism over the treatment for COVID-19 virus turned out to be short-lived after Gilead Sciences issued a note of caution on their antiviral drug Remdesivir. This comes on the back of growing concerns over the economic fallout from the pandemic and revived the US dollar’s demand as the global reserve currency.

The recent market worries were further fueled by the incoming dismal US macro data, which illustrated the severity of the collapse in global economic activity and forced investors to take refuge in the USD’s perceived safe-haven status. The greenback was further underpinned by a strong intraday rally in the US Treasury bond yields.

Meanwhile, the global risk sentiment remained well supported by the fact that the US President Donald Trump hinted at the reopening of the U.S. economy. The risk-on mood was evident from a strong bullish mood around the equity markets, which might extend some support to the perceived riskier currency – the aussie – and help limit the downside.

There isn’t any major market-moving economic data due for release on Friday. Hence, developments surrounding the coronavirus saga might continue to influence the broader market risk sentiment and produce some meaningful trading opportunities on the last day of the week.

Technical levels to watch