- AUD / USD fell to the lowest level of 2021 on Monday.
- The US Dollar Index is rising for the third day in a row.
- Major equity indices are still on track to open significantly lower.
The pair AUD/USD It closed the last two trading days of the previous week in negative territory and started the new week under downward pressure. After touching its lowest level since late November at 0.7329, the pair achieved a modest rebound and was last seen shedding 0.72% on the day at 0.7349.
Risk aversion on Monday is weighing on the AUD while providing a boost to the safe-haven dollar. Reflecting the gloomy market mood, major European stock indices are losing more than 2% and S&P futures are down 1.2%. The major Wall Street indices are still on track to open with a large gap to the downside and AUD / USD is likely to struggle to extend its recovery.
Meanwhile, the US Dollar Index is up 0.15% on the day at 92.85. There will be no high-level data releases from the US for the remainder of the day. On Tuesday, the Reserve Bank of Australia will release the minutes of its July policy meeting.
AUD / USD outlook
Credit Suisse economists believe that AUD / USD could continue to decline towards 0.7200.
“With a major top in place, we maintain our central bearish view with the next minor support seen at 0.7379 / 72, then 0.7338 and then 0.7209, the 78.6% retracement of the rally since last November,” economists said. “While we would look for support at 0.7209 to hold at first, then in due course, you should see support below at 0.7159 / 45 and finally our main target at 0.7085 / 43 – the ‘measured primary target’ and a 38.2% retracement of all of 2020/2021 bullish trend. “