AUSTRALIAN DOLLAR FORECAST: AUD/USD PRICE ACTION SPIKES HIGHER AS POSITIVE CORONAVIRUS VACCINE NEWS OVERSHADOWS CHINA TRADE TENSION
- AUD/USD surges as risk appetite flourishes following the latest coronavirus vaccine headlines
- Australian Dollar continues to benefit from improving market sentiment and fading FX volatility
- China trade tension remains a major threat to AUD/USD price action and the broader Aussie
Spot AUD/USD spiked 2% higher on Monday and was driven primarily by widespread Australian Dollar strength. The Aussie climbed throughout the trading session as trader sentiment improved, and appetite for risk increased, which seemed largely catalyzed by the latest coronavirus vaccine headlines.
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Early reports that there might be an effective and safe vaccine for COVID-19 provided markets with a fresh dose of coronavirus optimism. Moderna, a drug manufacturer in the US, announced findings from an eight-person phase I clinical trial for its coronavirus vaccine that showed encouraging results. This propelled the Australian Dollar and other pro-risk assets higher while safe-haven assets, like the USD, came under pressure.
AUD/USD PRICE CHART: DAILY TIME FRAME (23 DECEMBER 2019 TO 18 MAY 2020)
Upward momentum recorded by AUD/USD price action so far this week seems to have stalled near the 0.6250 mark. The 125-pip jump notched by the Aussie against its US Dollar peer since Friday’s close reiterates the 0.6400 handle as a major technical support level that shows potential to keep AUD/USD prices bolstered going forward.
Spot AUD/USD might struggle to sustain its advance, however, considering the daunting technical barrier presented by the 0.6550 price zone. This area of resistance is underpinned by the April and month-to-date swing highs. That said, AUD/USD prices could gyrate between the 50-day and 200-day exponential moving averages as forex traders battle over the Aussie-Dollar’s next major direction amid conflicting fundamental forces.
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US Dollar outlook has improved recently with the FOMC reiterating its ‘no-to-NIRP’ stance, which could present a bearish headwind to AUD/USD price action. Also, spot AUD/USD might also face downward pressure owing to risk from US-China trade wars 2.0.
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