AUD/USD Price Outlook: Virus Optimism Boosts Australian Dollar
AUSTRALIAN DOLLAR FORECAST: AUD/USD PRICE REBOUNDS AS CORONAVIRUS CONCERNS ABATE
- AUD/USD spiked back above the 0.6000 price to start the week largely owing to a recovery in trader sentiment
- Spot AUD/USD jumped more than 100-pips as markets turn more optimistic due to fading coronavirus concerns
- The Australian Dollar could continue rising while volatility dissipates, and risk appetite improves, but technical resistance threatens the rebound
AUD/USD was the best performing major currency pair at the end of Monday trade after spot prices notched a 1.5% gain. Upside in spot AUD/USD price action, driven by broad-based Australian Dollar strength and US Dollar weakness, could come in response to recent coronavirus headlines that struck a positive tone.
AUSTRALIAN DOLLAR GAINS GROUND AS RISK-APPETITE RECOVERS, VOLATILITY FALLS
A prolonged recovery in market optimism, following news that coronavirus deaths and hospitalizations are starting to decelerate in Italy and New York, might fuel a deeper retracement in currency volatility, and facilitate higher spot AUD/USD prices in turn.
This is considering the Australian Dollar tends to rise during periods of risk-on sentiment, whereas the US Dollar, a popular safe-haven currency, typically benefits during episodes of risk aversion.
AUD/USD PRICE CHART: DAILY TIME FRAME (30 DECEMBER 2019 TO 06 APRIL 2020)
Following the latest 100-pip climb in AUD/USD, spot prices reclaimed the psychologically-significant 0.6000 handle and trade back above the 9-day exponential moving average. AUD/USD price action now faces a major test of technical resistance, however, presented by the 38.2% Fibonacci retracement of its year-to-date trading range.
AUD/USD PRICE CHART: 4-HOUR TIME FRAME (06 MARCH TO 06 APRIL 2020)
The recovery in spot AUD/USD price action has pushed the Australian Dollar into resistance also posed by a bearish trendline extended through the series of lower intraday highs notched on March 10, 11, 30 and April 01. This zone of technical confluence has potential to pressure AUD/USD back lower.
Although, if spot AUD/USD can form another higher high by topping the 0.6200 price level, it might exhaust Australian Dollar bears and help the Aussie keep clawing back downside recorded last month. From a fundamental perspective, the Australian Dollar and AUD/USD price action will eye the upcoming RBA interest rate decision on tap for release this Tuesday, April 07 at 1:30 GMT.
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