The AUDUSD pair is one of the currency pairs closely watched today. The President of the United States (POTUS) tested positive for COVID-19, and all eyes are on how the stock market will react next.
The stock market is of particular importance for the AUDUSD pair. The two markets traded in an almost perfectly positive correlation in the last months. Therefore, a move lower in the U.S. stock markets could trigger a selloff on the AUDUSD pair too.
Higher USD Due to Election Uncertainty
In a stunning twist of events, the POTUS announced that both himself and the First Lady have tested positive for COVID-19. Moreover, the two entered quarantine at the White House.
This blows everything away. Remember that we are in a full election campaign, with one debate behind and two more to come. If Trump’s condition does not ameliorate all this time, what will happen with the election campaign? Moreover, will the election be postponed, should one of the candidates not be able to campaign?
The news changes everything for both candidates’ campaign and for financial markets too. What is the road ahead? It looks like a perfect storm for equities, and the USD is there to benefit.
AUDUSD Rejected at Dynamic Resistance
So far, the stock market futures hold pretty well. And so does the AUDUSD. However, if we look at the currency’s pair performance in the last months, we notice that the recent move lower broke previous dynamic support. Moreover, the support turned into resistance, and the AUDUSD recent move higher failed to break it.
Therefore, the chances are that the technical rejection will lead to a move back to the lows, with the 0.70 area, a crucial area for the pair, to be tested again.
Bears would want to trade at market with a stop-loss at 0.7250 and a take profit a 0.6950, for a proper risk-reward ratio. For more about dynamic support and resistance levels, consider our trading coaching program.
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AUDUSD Forecast
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