AUD/USD Violates Downward Channel – Choppy Session in Play!
Arslan Butt • 2 min read
The AUD/USD pair closed at 0.72828, after placing a high of 0.72984 and a low of 0.72218. Overall, the movement of the AUD/USD pair remained bullish throughout the day. After falling for two consecutive days, the AUD/USD currency pair posted gains on Friday, on the back of a huge drop in US stocks and the drop in US jobs data. On Friday, the currency pair dropped to the lowest level in six days, during the early trading sessions, due to decreased risk sentiment and negative Australian macroeconomic data.
At 06:30 GMT, the Retail Sales figures released for August showed a decrease to 3.2% from the expected 3.3%, weighing on the Australian dollar, and in turn, adding pressure to the AUD/USD pair, causing it to fall. The currency pair is facing fresh pressure, due to an escalation in the US-China tensions, and the fact that the Chinese government had stopped the renewal process for American journalists working in China, in response to a similar move by the United States. China also warned that if the Americans did not stop undertaking such actions, they would put a stop to American media work in China.
However, in the late American session, after the release of the US economic data, the AUD/USD pair started to rise, as the US Non-Farm Employment Change came in lower than expected. The jobs created by the US government in August fell short of the projection of 1375K, coming in at 1371K, and weighing on the US dollar. The weak jobs data gave the AUD/USD pair a push, and it is starting to recover its daily losses.
The upward trend of the AUD/USD pair was further supported by the fall in US stocks on Friday. Meanwhile, the gains in the currency pair were capped by the news that the strict lockdown in the Australian city of Melbourne had been extended by two weeks. Victoria State Premier, Daniel Andrews, said that the restrictions would remain in place until September 28, but there would be a slight relaxation of measures. He said that thereafter, the gradual easing of measures would be implemented starting in October.
The state of Victoria has been an epicenter of the second wave of the coronavirus, as 90% of Australia’s death toll of 753 mortalities from COVID-19 occurred in the city. A total of 26,000 cases have been recorded among the Australian population of 25 million.
Daily Technical Levels
Pivot point: 0.7282
The AUD/USD pair is trading sideways, over an immediate support level of 0.7277. Closing of candles above this level may drive upward movement in the market, until the 0.7325 level. A bearish breakout at the 0.7276 level may drive selling until the 0.7249 level today. Good luck!