The AUD/USD pair was closed at 0.64880 after placing a high of 0.65611 and a low of 0.6456. Overall the movement of AUD/USD remained bearish throughout the day. On the back of the risk-on market sentiment, the US dollar gained traction after easing in lockdown from countries across the globe.
The fears of the second wave of COVID-19 has kept US dollar higher on Monday. The US dollar index raised more than1% and reached above 100 level on Monday. The strength of the US dollar weighed on AUD/USD prices on the starting day of the week. However, adding in the downfall of Aussie could also be attributed to a new trade war between China & Australia.
In response to this, Scott Morrison, the Australian PM, said on Monday that if the plan of China to impose tariffs on barley imports was connected to the broader diplomatic dispute over the investigation into coronavirus origin, then he would be very disappointed.
Besides, the Australian government has signaled that it would take the case to WTO if China would follow the planned duties of around 80% on barley imports. Aussie lost its traction after the increasing tensions between China & Australia. Weakened Aussie dragged down the prices of AUD/USD further to a point near 0.654 level on Monday.
Fig 1 – AUDUSD 4H Chart
Daily Technical Levels
Pivot Point: 0.6501
Technically, the AUD/USD is trading with a bullish bias, having surged above 0.6492 area, which has opened further room for buying until 0.6560 level. Recently, the pair has formed three white soldiers pattern, which usually suggests odds of a bullish trend in the Aussie pair, but considering the recent sideways trend and lack of continuity in the mark are making it harder for Aussie dollar pair to target 0.6562. Still, we should consider taking buying trades over 0.6495 area today. Good luck!