AUD/USD keeps the red below 0.6500 mark
- A combination of factors prompted some fresh selling around AUD/USD on Monday.
- A goodish pickup in the USD demand, weaker risk sentiment weighed on the aussie.
- The downside remains cushioned amid speculations about negative Fed interest rates.
The AUD/USD pair maintained its offered tone through the early North-American session, albeit has managed to rebound around 20-25 pips from daily lows.
The pair once again struggled to find bullish acceptance above 100-day SMA and witnessed some selling on the first day of a new trading week. The latest optimism over the re-opening of economies in some parts of the world and easing US-China tensions failed to impress bullish or provide any meaningful impetus to the China-proxy aussie.
The US dollar managed to regain some positive traction amid concerns about the second wave of coronavirus infections. This coupled with an intraday turnaround in the global risk sentiment further benefitted the greenback's relative safe-haven status against its Australian counterpart and contributed to the pair's intraday slide.
The AUD/USD pair weakened back below the key 0.6500 psychological mark and eroded a part of last week's goodish recovery move from the 0.6380-70 support area. However, a modest bounce in the US equity markets extended some support and helped limit deeper losses amid speculations that the Fed might push interest rates below zero.
In the absence of any major market-moving economic releases from the US, the broader market risk sentiment might continue to influence the USD price dynamics and produce some short-term trading opportunities on Monday.
Moving ahead, market participants now look forward to the release of the National Bank of Australia (NAB) Business Confidence and Business Conditions indexes. This along with the release of Chinese Producer Price Index might provide some impetus during the Asian session on Tuesday.
From a technical perspective, bulls are likely to wait for some follow-through buying beyond 100-hour SMA. A sustained move beyond the late-April swing high, near the 0.6570 region, will confirm a near-term bullish outlook and set the stage for a further near-term appreciating move.
Technical levels to watch
Any subsequent fall is likely to find some support near the 0.6445-40 region, below which the slide could get extended back towards the 0.6400 mark. On the flip side, momentum back above the 0.6500 mark now seems to confront some fresh supply near the 0.6540 region (100-day SMA) and is closely followed by the recent swing highs, around the 0.6570 level.