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AUDUSD Tests Resistance as Coronavirus Cases in AU Rise; Will It Hold Or Break?

AUDUSD Australian dollar

AUDUSD has had a bearish start to its day on concerns about geopolitical tensions in Iran and rising coronavirus cases in Australia hit headlines. The currency pair fell to a low of 0.6861 before it recouped most of its losses. As of this writing, AUDUSD is trading at 0.6883 which is 2 pips below its opening price.

There were reports earlier this morning that a large explosion happened in Tehran, Iran inside a military base. This sparked a jolt of risk aversion because it implied that there could be ongoing geopolitical tension. However, later reports said that it may have been an explosion inside a powerplant.

News about Australia seeing its highest level of new coronavirus cases in two months also weighed down AUDUSD. Today, the country recorded 33 new cases. Consequently, there are concerns that the country restarting economic activity could lead to more infections. Investors are worried that the government may soon decide to impose stringent lockdown measures again.

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AUDUSD Outlook

On the 1-hour time frame, it can be seen that AUDUSD is testing a confluence of resistance around 0.6890. First, this price coincides with a falling trendline when you connect the highs of June 23, June 24, and June 26. This price also aligns with the 100 SMA and 200 SMA. Lastly, when you draw the Fibonacci retracement tool from the high of June 24 to the low of June 25, it can be seen that it also aligns with the 38.2% Fib level. Reversal candlesticks around this price could mean that AUDUSD may soon fall to its June 25 lows at 0.6846.

On the other hand, a strong bullish close above today’s Asian session highs at 0.6894 could mean that there are still buyers left in the market. It may just invalidate resistance at the SMAs and the falling trendline. Consequently, this could indicate a potential rally to its June 24 highs at 0.6961.

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