Risk aversion hit the currency markets just before the onset of the New York session, following a warning from the EU about the dire consequences of the massive second wave of the coronavirus currently sweeping through large parts of the Eurozone. Reports of new lockdowns in France hurt the Euro and has spread fear among holders of risky currencies, causing them to unwind their positions.
Earlier in the day, the Reserve Bank of Australia (RBA) published its Trimmed Mean Consumer Price Index (CPI) data for Q3 2020. This report showed a modest 0.4% increase, which beat the previous quarter’s figure of -0.1%. However, this only produced a transient firming of the AUDUSD to 0.7159 in the early London session, before risk aversion seized the markets and forced an intraday selloff below 0.7060.
Technical Outlook for AUDUSD
The pair is now testing the support at 0.70595 after intraday selling set off a 0.91% decline on the pair. A breakdown of this pair targets the 0.70034 price support, with 0.69160 lining up as an additional target to the south.
On the flip side, a recovery towards 0.71363 cannot be ruled out. This has been the preferred level for selling on rallies for the past four trading sessions and represents a genuine upside target. However, 0.71010 is an intervening resistance level.
We could see price action thin out into low volumes as traders await next week’s RBA interest rate decision.
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AUDUSD Daily Chart
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