AUDUSD Retreats from 10-Month Highs as the US Records More Than 2 Million Coronavirus Cases

After surging to its 10-month highs, AUDUSD gave up ground as risk aversion weighed down on market sentiment. The currency pair is currently leading losses among the major currencies. As of this writing, it is down by 0.40% at 0.6827.

There seems to be a growing concern among market participants about the rising coronavirus cases in the US. Yesterday, the CDC reported 20,486 new cases in the country which brings the total number of infected people to over 2 million. Consequently, investors are worried that the US will soon need to re-impose lockdowns to mitigate the spread of the coronavirus. With this, worries about the US economy were once again highlighted.

Why did the dollar rally?

The currency shares a safe haven status like the Japanese yen and Swiss franc. In times of panic, investors seek its safety. This would explain why other currencies aside from those previously mentioned, lost ground to the USD.

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AUDUSD Outlook

On the daily time frame, it can be seen that AUDUSD is testing a confluence of support at 0.6820. For one, this price coincides to the rising trendline when you connect the lows of March 19, May 18, and May 25. When you draw the Fibonacci retracement tool from the low of May 22 to the high of June 10, it can also be seen that this price coincides with the 50% Fib level. Because the currency pair is still trading above its trendline, it can be said that the uptrend is still intact. Reversal candlesticks around this price could mean that AUDUSD will soon retest its recent highs at 0.7062.

Alternatively, a strong bearish close below today’s Asian session lows at 0.6798 would invalidate the trendline. It could then mean that there are still sellers in the market and AUDUSD could soon fall to 0.6665 where the currency pair may test the 200 SMA for support.

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