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18.01.2022 07:35

AUD/USD leans towards weekly support near 0.7200, coronavirus, yields in focus

  • AUD/USD remains pressured after three-day downtrend from the highest levels since mid-November.
  • Indecision over virus conditions at home joins softer Aussie consumer confidence data to weigh on the quote.
  • US traders’ return after MLK Day shifts market focus on yields amid Fed rate-hike chatters.

AUD/USD sellers attack 0.7200 as the Aussie pair prints a four-day downtrend amid the initial Asian session on Tuesday.

The quote’s latest weakness could be linked to the highest covid-linked deaths from Australia’s most populous state, as well as cautious mood ahead of the bond trading resumption following Martin Luther King’s Birthday. Also responsible for the AUD/USD weakness is the downbeat weekly sentiment data.

Australia’s ANZ Roy Morgan Weekly Consumer Confidence Index for the period ended on January 16 dropped below 106.00 to 97.9.

It’s worth noting that virus numbers in Australia have been declining in the last four days but the death toll jumped in the nation’s most populous state New South Wales (NSW). “NSW has sustained its deadliest day of the pandemic with 36 COVID-19 deaths recorded in the latest reporting period. The number of people with the virus in hospital rose to 2,850, while ICU admissions were up slightly to 209,” per ABC News.

The daily covid infections are also easing in the UK and the US but the death toll ad virus spread among elderly, as well as children, tests policymakers’ success in jabbing.

It’s worth noting that the market’s indecision over the virus conditions and an absence of the US traders stopped AUD/USD traders from cheering the strong China Q4 GDP the previous day. Also positive are the talks over the People’s Bank of China’s (PBOC) key policy rate after the Chinese central bank cut the reverse report and Medium Term Lending Facility (MLF) rate the previous day.

Moving on, the AUD/USD traders will pay close attention to the US Treasury yields amid hopes of the faster Fed rate hikes in 2022, backed by Federal Reserve Bank of San Francisco President Mary Daly and New York Fed President John Williams on Friday. That said, the US Dollar Index (DXY) stretched the previous day’s rebound from a 10-week low before ending Monday with minor gains around 95.23.

Although the economic calendar is mostly silent ahead of Australia’s key jobs report on Thursday, a further surge in the yields can weigh on the AUD/USD prices.

Technical analysis

Failure to cross the 100-DMA, around 0.7285 by the press time, joins the pair’s clear downside below the 100-SMA level of 0.7220 to direct AUD/USD prices towards an ascending support line from January 07, near 0.7200.

Should the quote drop below 0.7200, the 200-SMA level near 0.7180 will test AUD/USD sellers before directing them to upward sloping trend lines from December 03 and December 20, respectively around 0.7170 and 0.7155.

Meanwhile, a clear upside break of the 100-SMA level of 0.7220 will direct the AUD/USD bulls towards another battle with the 100-DMA surrounding 0.7285.

Overall, AUD/USD prices stay depressed with the bumpy road to the south.

 


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Sydney 21:00 06:00 00:00 09:00 00:00 09:00
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Hong Kong, Singapore 00:00 09:00 03:00 12:00 03:00 12:00
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European Frankfurt, Zurich, Paris 06:00 15:00 09:00 18:00 9:00 18:00
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London 07:00 16:00 10:00 19:00 10:00 19:00
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Chicago 13:00 22:00 16:00 01:00 16:00 01:00