Daily Market Recap - AUDUSD

The Australian Dollar continues to tank against the US Dollar after falling for a consecutive fifth session on Thursday. This brings the overall weekly tally close to a 3.5 percent decrease in the pair. The main focal point now will be whether the AUDUSD will manage to hold above the 0.70 level before the end of the trading week.

The move behind the Aussie is fuelled by increased risk-off sentiment amid renewed coronavirus cases globally and the threat it poses to the economic recovery. The rise in the greenback has also been one of the major forces behind the pairs downfall as the buck is benefitting from its safe-haven status during an increasingly uncertain landscape.

Without any large macroeconomic news coming out of Australia today, the focus has been on the US with its unemployment figures. The initial jobless claims came in above consensus at 870k instead of the 843k expected which increased buying demand in the US Dollar.

The US labor market appears to be running out of steam and analysts are suspecting this may be the catalyst for a fresh round of fiscal stimulus. Though the likelihood of it being delivered before the November election remains slim at the moment as both Republicans and Democrats have yet to agree to an additional package since the previous one expired in July.

From a technical perspective, the AUDUSD faces a significant test at the 0.70 marks which will likely determine its fate for the near future. Should the pair manage to hold above the 0.70 support zone, a further consolidation play is probable around the 0.71 to 0.725 levels.

(Chart Source: Tradingview 24.09.2020)

On the flip side, a move below the 0.70 will likely solidify the downtrend in AUDUSD towards the 0.678 brackets. The main trend on the pair is down which may entice the bears to double down. The trick would be to get a feel of the risk sentiment in the market as viable to signal for the AUDUSD to move lower. For now, traders should eye the RSI in the coming session as buyers may be tempted to move back into the market to take advantage of any short-term reversal and buy into the dip.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.