AUDUSD is off to a bullish start in today’s trading. As of this writing, the currency pair is up by around 0.22% from its opening price at 0.6963 despite the resurgence of coronavirus cases in Australia and concerns about China’s retaliation.
According to the latest health statistics, the state of Victoria continues to register around 200 cases on a daily basis. Today, it was reported that there were 177 more. Meanwhile, in Sydney, there has also been a reported outbreak of the coronavirus.
On the political front, China warned that it would retaliate against Australia after the latter offered a pathways for Hong Kong residents to immigrate after the imposition of the new security law. Chinese foreign ministry spokesman Zhao Lijian said that “all consequences would be borne by Australia.” Most analysts interpret this as a sign that China may soon impose added tariffs to Australia as a form of retaliation.
On the brighter side of things, the University of Queensland will begin its human trials for its coronavirus vaccine today. The news could be attracting bids into the AUDUSD.
On the hourly time frame, it can be seen that AUDUSD has recently bounced off support at the 200 SMA around 0.6943. It is also worth noting that the currency pair has been making higher lows after making lower lows. Consequently, it would seem that an inverse head and shoulders chart pattern has formed at the 200 SMA.
When you enroll in our free forex trading course, you will learn that this chart pattern is widely considered as a bullish indicator. A strong close above the neckline resistance around 0.6970 may mean that AUDUSD could soon rally to last week’s highs around 0.7000.
On the other hand, a strong close below today’s low at 0.6939 may indicate that there could still be enough sellers in the market to push AUDUSD lower. Should this happen, we could soon see the currency pair fall to 0.6923 where it bottomed on July 10.