- A combination of factors triggers some new selling around AUD / USD on Tuesday.
- Nervousness around covid-19 and risk aversion in the markets weighs on the higher perceived risk AUD.
- Some rallies in US bond yields benefited the USD and added to the decline in the pair.
The pair AUD/USD is extending its steady intraday decline and has fallen to new daily lows just below the 0.7350 level at the start of the European session on Tuesday.
The pair has struggled to capitalize on the previous day’s good intraday bounce of around 60 pips from multi-day lows and once again it has found new sales near the 0.7400 level. Concerns about an increase in new COVID-19 cases in Australia’s most populous state they have continued to act as a headwind for the Australian dollar and put some pressure on the AUD / USD pair.
In fact, New South Wales reported 145 new cases on Monday, up from 141 a day earlier, while struggles to contain an outbreak of the Delta variant highly contagious from coronavirus. Authorities have said they want that number close to zero before lifting restrictions on July 30. This largely offsets optimism about the possible relaxation of the lockdown in Victoria.
Apart of this, a softer tone around the stock markets it has put some additional pressure on the higher perceived risk Australian dollar. This, coupled with a modest strength in the US dollar, has contributed to the selling tone around the AUD / USD pair. The USD has found support from a rebound in the yield of US government bonds at 10 years, close to the 1.30% level.
Looking ahead, market participants now await the US economic calendar, which highlights the publication of durable goods orders and the Conference Board’s consumer confidence index. The key focus, however, will be on the outcome of the FOMC monetary policy meeting day, which will help determine the next directional move for the AUD / USD pair.
Ahead of the key event risk, the latest Australian consumer inflation figures, to be released during the early part of trading action on Wednesday, would provide some significant boost. Meanwhile, the inability of the AUD / USD pair to capitalize on its rebound from annual lows suggests that the recent downtrend may still be far from over.
Technical levels to observe
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