AUD/USD Supported Over Double Bottom 0.7064 – Quick Trade Setup!
Arslan Butt • 2 min read
The AUD/USD closed at 0.70777, after placing a high of 0.70977, and a low of 0.70702. Overall, the movement of the AUD/USD pair remained bearish throughout the day. The AUD/USD pair posted losses on Friday, after fresh dovish comments by the RBA governor, and due to the strength of the broad-based US dollar.
The US dollar was strong across the board, after hopes that congress will deliver the coronavirus stimulus measures before the elections faded away. US President Donald Trump agreed to increase the size of the stimulus measures to 1.8 trillion dollars, in an effort to meet the Democrats halfway. However, the Republicans are not in favor of any big amount; instead, they are pushing for a small $ 500 billion package.
The difference of opinions regarding the US stimulus measures strengthened the greenback, as any chances of the stimulus being passed before the election were dashed. As a result, the strengthening US dollar weighed on the AUD/USD pair, which started to decline. The pair extended its losses on Friday, after the governor of the Reserve Bank of Australia’s hinted at possible rate cuts in the near-term. The rate cuts will support job growth and ease currency pressure within the current pandemic situation.
During the week, the Australian Dollar remained the worst performer among the G10 currencies, due to the expectations for further easing by the RBA next month. Another reason behind the downward momentum of the Aussie was the absence of risk sentiment in the market.
Recently, the rising numbers of coronavirus cases, along with the uncertainty related to US fiscal stimulus measures, have raised the safe-haven appeal and damaged the risk sentiment. After many days, the risk sentiment was supported by news that the American giant, Pfizer, is expected to apply for emergency use authorization for its coronavirus vaccine by the end of November.
This news added strength to the perceived risk currency, the Aussie, and helped limit losses in the AUD/USD pair on Friday. On the data front, the Foreign Direct Investment from China for September increased to 5.2%, from the previous 2.6%, and raised the China-proxy Aussie, capping further losses in the AUD/USD pair.
On the other hand, the US dollar remained strong on the board, after releasing its highlighted macroeconomic data reports. The Core Retail Sales for September came in at 1.5%, against the projected 0.4%, lending support to the US dollar. The Retail Sales for September rose to 1.8%, against the expected 0.7%, also boosting the greenback. At 19:00 GMT, the Prelim UoM Consumer Sentiment figures were released, showing an advance to 81.2 points, compared to the expected 80.2, likewise supporting the greenback. The strong US dollar across the board weighed on the movement of the AUD/USD pair on Friday, hence the losses that were posted for the pair.
Daily Technical Levels
Pivot Point: 0.7087
The AUD/USD is holding below an immediate resistance level of 0.7097, and candles closing below this level may drive further selling in the AUD/USD pair until 0.7010. Conversely, crossing over the 0.7098 level could cause further buying until the 0.7150 mark. Good luck!