The AUD/USD pair rose above 0.7200 level on Monday amid risk-on market sentiment but failed to post gains and hold the position and reversed its direction after the risk sentiment was softened during the late American session and US dollar picked it pace. The risk sentiment that was supported by the latest news of approved treatment of coronavirus by the US Food & Drug Administration on Sunday. Using blood plasma of recovered patents as an antibody against the virus was already being used to treat coronavirus in many countries. And over the weekend, FDA approved to use it as an emergency method to treat severely ill patients of COVID-19.
US President Donald Trump said that this method was approved after research showed that a 35% mortality rate was down by it. He also appealed the recovered Americans to donate plasma so that the virus can be killed, and in this way, the path to economic recovery could be eased.
The renewed hopes of quick economic recovery raised risk sentiment and the risk perceived Aussie gained traction and pulled the pair AUD/USD with itself above 0.7200 level on Monday.
However, in late American session, the fact that doubts over US stimulus package persist and the lingering US-China tensions with back to backfires on each other decreased the risk appetite and added strength to the safe-haven greenback. The strong US dollar due to increased US Treasury yields on the 10-year note and the rising price of the US Dollar Index (DXY) above 93 level, pulled the AUD/USD pair on the downside. The pair AUD/USD lost almost all of its early daily gains and dropped to 0.7145 level.
Moreover, the US-China tensions were on the back foot as no news negative or positive came in on Monday from both sides. However, the lingering dispute between the world's two biggest economies is only escalating with the time, and no effort from each side has been made to ease it.
As the United States has been continuously targeting China, even the Trump administration's election campaign is based on targeting China. The latest statement from US President that if he wins the elections for the second time will make the United States independent of China. He promised to bring back home the supply chain and manufacturing plants to free the USA from China's dependency.
These ongoing tensions kept the additional gains limited in AUD/USD pair on Monday. On Tuesday, the Conference Board's Consumer Confidence and New Home Sales data will be published that will remain under observation by market traders.
Daily Technical Levels
Pivot point: 0.7173
The AUD/USD is trading sideways within a narrow trading range of 0.7219 - 0.7135 level. Closing of candles above this level or below this range is likely to drive further movement in the market. A bullish breakout of 0.7219 level can drive the buying trend until 0.7279 level, while the selling bias can lead the pair towards 0.7078 level upon the breakout of 0.7134. The RSI and 50 EMA are in support of the buying trend today. Good luck!