- A combination of factors led to strong selling around AUD / USD on Tuesday.
- Concerns about the spread of the Delta variant affected the perceived riskier Aussie.
- A broad-based USD strength further contributed to the sell bias and intraday slide.
The pair AUD/USD It fell to week-long lows during the middle of the European session, and the bears are now pointing to a move to challenge the key psychological 0.7500 level.
The pair extended the previous day’s rejection drop from 0.7600 and witnessed some subsequent selling for the second consecutive session on Tuesday. The Australian dollar is emerging as one of the worst performing major currencies amid concerns over renewed COVID-19 closures in some parts of the country.
Perth, the capital of Western Australia, began a four-day lockdown starting Tuesday, joining Sydney and Darwin. Queensland will impose a three-day rapid shutdown on the capital Brisbane and some neighboring regions starting Tuesday night. In short, more than 20 million Australians, about 80% of the population, live under restrictions.
Meanwhile, fears about the spread of the highly infectious Delta variant of the coronavirus weighed on investor sentiment. This was seen as another factor that pushed flows away from the perceived riskier Aussie. Apart from this, a generalized strength in the US dollar put some additional pressure on the AUD / USD pair and contributed to the decline.
The USD was supported by speculation that the Fed will tighten its monetary policy sooner if price pressures continue to intensify. This, coupled with a good recovery in US Treasury yields, further acted as a tailwind for the safe-haven dollar and dragged the AUD / USD pair further below the horizontal support of 0.7545. -40.
Market participants are now looking forward to the US economic agenda, highlighting the release of the Conference Board Consumer Confidence Index. Traders could follow the signs of US bond yields and general market risk sentiment. This could influence the USD price dynamics and generate some trading opportunities around the AUD / USD pair.
Technical levels
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