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AUD/USD Examins Double Top - Sell Setup In Play! 


AUD/USD extended its previous day winning streak and took further bids at the weekly high, around above 0.7200 mark, mainly due to the upticks in the equity market (backed by the positive reports about the coronavirus treatment and hopes of the Sino-American trade discussion), which underpinned the perceived risk currency Australian dollar and contributed to the currency pair gains.

The broad-based U.S. dollar losses, triggered by the worries that the second wave of COVID-19 cases in the U.S. could ruin the recovery in the world's biggest economy, also favored the currency pair buyers. On the other hand, the mixed China Caixin Services PMI and Aussi data become the key factor that capped further upside in the Aussie.

However, the upticks in the U.S. stock futures could be associated with positive reports about the virus treatment. It is worth reporting that the transfusions of blood plasma rich, with antibodies from recovered COVID-19 patients, received by hospitalized patients decreased their death rate by about 50%.

Apart from this, the market trading sentiment was also supported by U.S. President Donald Trump's decision to reopen the country and said in the White House press conference that the permanent lockdown was not a good idea to stop COVID-19. This, in turn, the equity market got a lift, which provided support to the perceived risk currency Australian dollar and contributed to the currency pair gains.

Whereas, the Aussie traders did not give any major attention to the mixed China Caixin Services PMI data. At the data front, China's Caixin Services PMI arrived in at below expectations to 54.1 in July against 56.8 market expectations and 58.4 previous readouts. The data did not succeed in following the headlines activity numbers from China published recently.

On the other hand, Australia's AiG Performance of Construction Index grew past-35.5 previous readings to 42.7, whereas Commonwealth Bank Services PMI eased from 58.5 forecasts and before 58.2 in July. Moreover, Australian Home Loans for June reversed -7.6% earlier mark with +7.1% while Investment Lending for Homes also rose 8.1% from -15.6% prior. However, this mixed reading failed to put any offer under the currency pair.

Also supporting factor for the currency pair was the reports that the Reserve Bank of Australia (RBA) announced Australian government bond purchases to the tune of AUD500 million on the day to support the economy, which eventually underpinned the Aussie currency and sent the currency pair weekly higher.

Whereas, the market trading sentiment seemed rather unaffected by the uncertainties over the much-awaited fiscal package. The House Speaker Nancy Pelosi signaled that any deal on the fiscal package between both parties in U.S. Congress was difficult.

At the USD front, the broad-based U.S. dollar remained depressed in light of the dwindling U.S. economic recovery due to the coronavirus resurgence, which caused the Job losses in the U.S. manufacturing sector. However, the declines in the U.S. dollar kept the currency pair higher. Whereas, the U.S. Dollar Index that tracks the U.S. dollar against a bucket of other currencies dropped by 0.09% to 93.148 by 10 AM ET (3 AM GMT).

At home, the growing worries over the continued rise of the coronavirus cases in Australia's most populous state of Victoria could undermine the Aussie dollars. Australia's Queensland state also has decided to close its border with New South Wales today to stop the second wave of COVID-19.

The eyes will be on the U.S. Unemployment Claims that are expected to have dropped than the previous week. It reflects that the U.S. labor market sector has improved slightly and may drive slight buying in the U.S. dollar. Check out the technical outlook below.

Daily Technical Levels

Support Resistance

0.7149 0.7239

0.7106 0.7286

0.7059 0.7329

Pivot point: 0.7196

The AUD/USD pair produces an ascending triangle that underpins the Aussie at 0.7180; moreover, the double top resistance marks at 0.7230. Today, upward sentiment appears crucial as the RSI and 50 EMA support skyward momentum in the AUD/USD pair. On the bullish side, a breakout of 0.7231 resistance level can lead AUD/USD towards the next target level of 0.7280. Conversely, the support can be seen at 0.7150. Sell should be preferred below 0.7225 level today. Good luck!

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