AUD / USD falls to test 0.7350 amid notable US dollar demand

• AUD / USD remains exposed to further downside risks, near 0.7350
• Demand for the US dollar remains unabated amid risk aversion.
• Victoria extends the blockade and concerns about the Delta variant of the covid concern investors.

The AUD / USD is fast approaching 0.7350, moving at the lowest levels since December 2020as the bears remain unstoppable amid a relentless rise in the US dollar across the board.

The USD continues to find demand at the expense of perceived riskier assets, such as the Australian dollar, as the spread of the Delta variant of the coronavirus Investors’ confidence about the economic recovery worries worldwide.

Amid an outbreak of covid cases in Australia, the country’s most populous state, Victoria, extended the blockade after registering 16 new cases. Meanwhile, New South Wales had 98 cases and the fifth death from the Delta outbreak.

The prolonged lockdowns and covid cases in Australia have led many economists to lower their economic forecasts and push back expectations of a rate hike from the Reserve Bank of Australia (RBA), which has led to local currency concerns.

In the meantime, USD remains firm amid flight to safe haven and the uncertainty of the Fed’s path to monetary policy normalization, given recent mixed US economic data and mixed messages from Fed Chairman Jerome Powell last week.

Putting additional downward pressure on the Australian dollar appears to be the latest concern voiced by US Secretary Janet Yellen about the US-China trade deal. The former president of the Fed Yellen said the trade deal with China did not address “fundamental problems”.

Yellen said: “Tariffs are imposed on consumers. In some cases, it seems to me that what we did hurt American consumers, and the type of agreement that the previous administration negotiated did not really address in many ways the fundamental problems that we have with China. “

For the remainder of the day, the pair will continue to take cues from broader market sentiment and US dollar price action amid little data at the start of a new week. Attention turns to the minutes of the July RBA meeting, which will be released on Tuesday.

AUD / USD technical levels