AUD/USD stays pressured around 0.7600, long weekend defends bearish chart pattern

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  • AUD/USD remains depressed even after mostly unchanged weekly open.
  • US jobs report, stimulus chatters favored sentiment during Friday’s light trading.
  • Queensland marks one overseas case, AstraZeneca vaccinations will continue in Australia.
  • AiG Performance of Construction Index, TD Securities Inflation can offer intermediate clues amid off in Australia.

After three consecutive weeks of losses, AUD/USD eases towards 0.7600 amid early Monday morning in Asia. US dollar strength and the coronavirus (COVID-19) resurgence fears, not to forget the West versus China tussle, seem to weigh on the aussie pair off-late, despite recovering covid conditions at home. Markets in Australia are off due to Easter Monday, following the off on Good Friday, which in turn seems to favor the traders as the pair inches closer to confirm a bearish chart pattern.

Read: Forex Today: Upbeat US employment figures boost risk appetite

Bears are waiting…

US President Joe Biden’s $2.25 trillion infrastructure plan, coupled with hints to more, keeps market players hopeful of faster economic recovery. However, challenges to the optimistic stimulus in the Senate, due to tax hikes, dim the key bill’s allure. Also on the positive side could be the speedy vaccinations, even in Australia, despite allegations on the frontline vaccine AstraZeneca. Furthermore, recently upbeat economics from the US and China, also from Canberra, suggests the global economy is gradually recovering from the pandemic.

While the aforementioned catalysts should have favored AUD/USD buyers, due to the pair’s risk-barometer status, the US dollar’s run-up, backed by the bond bears, likely winning the game. The US 10-year Treasury yields rose to a 15-month high last week before easing to 1.67% amid reflation fears and upbeat US fundamentals.

Also weighing on the AUD/USD is the Western tension with China over multiple issues including Hong Kong, Vietnam and Xinjiang. Given Beijing’s status as Australia’s largest customer, despite recent trade jitters, worries for China drag the quote too.

Furthermore, the recent Brazilian variant of the coronavirus (COVID-19) is also challenging the market sentiment and AUD/USD traders as covid strains spread faster and are hard to tame.

Moving on, off in Australia can restrict AUD/USD moves but challenges to the risk-on mood can pressure the pair to the south. Also important to watch will be Australia’s AiG Performance of Construction Index and TD Securities Inflation for March.

Technical analysis

Repeated failures to cross the 100-day SMA, around 0.7640 by the press time, coupled with the sluggish momentum indicators, risk confirming head-and-shoulders bearish chart pattern on the daily play. However, a clear break of 0.7560-55 becomes necessary before eyeing 400 pips of south-run.

 

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