AUD / USD capped below 0.7050, pulls back to test 0.7000 support area

• AUD / USD retraces for the second day in a row to test multi-month lows at 0.7000.
• The Australian dollar falls due to the general strength of the US dollar.
• AUD / USD Seen Below 0.70 Before US Elections – Westpac.

The attempt to recover the Australian dollar from the 0.7010 lows seen at the beginning of the US session it has lost steam just below 0.7050. The pair is down again, weighed down by the widespread USD strength, to approach the 0.7000 support area.

Australian dollar sinks thanks to strong USD

The Aussie is trading lower for the second day in a row on Thursday, as moderate risk appetite is offset by the overall strength of the US dollar. The US Dollar Index appreciates 0.7% on the day to hit levels above 94.00 for the first time since late September.

Concerns about the global increase in COVID-19 infections, with Europe introducing new lockdowns, combined with uncertainty about the outcome of the US elections, keep investors away from risk and increase demand for safe havens like the dollar.

Beyond that, the dovish stance of the Reserve Bank of Australia, which is expected to cut interest rates next week, is adding negative pressure on the Australian dollar.

AUD / USD expected to break below 0.70 ahead of US elections – Westpac

Westpac’s FX strategy team sees the Aussie below 0.70, under pressure ahead of key events next week (RBA, US Elections): “Overall, we see risks of a breakout of 0.7000 / 10 (support) ahead of the election, but there is room for a strong rebound if stocks rally. ”