AUDUSD Slides Sharply as Coronavirus Hit Australia’s Biggest Trade partner
The Australian Dollar, AUDUSD, is one of today’s biggest losers, as the Coronavirus, is quickly getting in the forefront with traders. As reported earlier on InvestingCube, 35 million Chinese are in some sort of lock-down, and railway activity is down by 42% since last year, and so are flights, as people are prohibited to travel, but also to protect themselves from the virus. With millions of Chinese waiting out the virus, Chinese economic activity is bound to slow, and investors and traders have therefore sold the Australian dollar.
The Australian dollar was already trading lower from December 31, when AUDUSD reached a high of 0.7032, on expectations of the central bank reducing interest rates, and the devastating Australian bushfires. However, on January 23 the AUDUSD jumped on the better than expected Australian labor market report but the gains were short-lived, despite the Australian economy generating two times more new jobs, than the 12,200 projected.
The AUDUSD pair triggered a month-old, head and shoulders pattern on January 21. The pattern started forming on December 13, and as I suggested a few days ago, a break to the December 17 low of 0.6835 would send the AUDUSD lower. The price is now about to reach the November low of 0.6751 and some trades will book partial profits. The next support level is the October 16 low of 0.6726, yet, the ultimate level is 0.6664 according the the head and shoulders pattern. If the AUDUSD trades back to the 0.6825 to 0.6887 interval, then I suspect traders will short-sell the AUDUSD. The trend will remain downwards below the 0.6887 level.