- AUD/USD is almost sideways for the day, but risks are skewed to the downside.
- Concern about a global economic recession prevails; USD rose to a 52-week high as DXY broke above 107,000.
- Analysts at Credit Suisse see the pair as likely to drop towards 0.6460 once it breaks above 0.6757.
The AUD/USD rebounds from Tuesday’s lows, paring some losses, but remains at the lower end of the weekly range heading into the North American session. At 0.6800, AUD/USD remains slightly sideways.
Risk aversion emerges at the open of Wall Street and the USD remains strong
In a context where concerns about a global economic slowdown persist, the US dollar remains strong, limiting the value of the main currencies. Talks between US and Chinese policymakers earlier in the week appear to ease tensions between the two countries. In fact, US President Joe Biden is considering lifting some tariffs on Chinese goods and services imposed by the Trump administration.
As for the coronavirus crisis in China, during the Asian session, Shanghai reported more than 100 cases and authorities ordered mass testing. This reignited fears of a further lockdown in China’s second-largest city.
The aforementioned factors, along with falling iron ore prices, could keep AUD/USD under pressure. Meanwhile, the US Dollar Index, a gauge of the greenback’s value against a basket of pairs, is up 0.44% at 106.969, a headwind for AUD/SD. Further downside action expected unless AUD/USD traders recapture the 0.6900 figure.
At the time of writing, the US released the S&P Global PMIs for June in the services sector and the composite sector, which beat expectations. AUD/USD reacted lower from daily highs at 0.6826 towards 0.6804, putting 0.6800 in sight.
Credit Suisse analysts see AUD/USD as likely to hit 0.6461 once sellers break above 0.6757. “Support remains at the 50% retracement of the 2020/21 high at 0.6757, a break below which is needed to allow further decline to 0.6643 and 0.6609/00, with potential to hit next key support on the 61.8% retracement at 0.6461 in due time.”
AUD/USD Key Technical Levels
Source: Fx Street
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