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AUD/USD Upward Channel In-Play - Is It Good Time to Go Long? 

EagleFX

The AUD/USD currency pair extended its Friday's recovery moves and rose to a session high around the 0.6970-80 region. However, the bullish bias in the currency pair could be attributed to the upbeat trading sentiment underpinning the perceived riskier Australian dollar and contributed to the currency pair gains. The broad-based U.S. dollar selling bias triggered by the declines in the U.S. bond yields also contributed to the currency pair gains. At the press time, the AUD/USD currency pair is currently trading at 0.6965 and consolidating between 0.6940 and 0.6985. The AUD/USD pair has now moved back closer to the key 0.7000 psychological level and supported by the current risk-on mood.

The risk-on market sentiment recently got support from the encouraging Chinese vaccine news. The study on Remdesivir showed that the drug reduced coronavirus deaths by 62%. The reason for the heavy optimism could also be associated with the reports that Pfizer and BioNTech confirmed that their vaccine could be approved by the FDA as soon as December. Moreover, the incoming positive economic data fueled hopes of a sharp V-shaped global economic recovery and remained supportive of riskier assets.

The risk-on market sentiment was further bolstered by the hopes of further stimulus from the U.S. due to the downbeat Producer Price Index (PPI), also backed by the comments from the President and CEO of the Federal Reserve Bank of Dallas Robert Kaplan.

As per the latest report at the coronavirus front, the U.S. recorded 59,747 new infections in the last 24 hours, as per the Johns Hopkins University. At the same time, the total number of cases in the U.S. crossed the 3.3 million mark. Global figures cross over 13 million, with more than 565,000 people died in the last 7-months due to the virus, as Global institute reports' tally. As we know, the U.S. leads the race. Unfortunately, Brazil and India also followed the footstep of the U.S. The latest figures from Florida suggested over 15,000 new cases on Sunday after the further push for reopening schools and anti-mask protests.

At home, the coronavirus is getting worse sharply with the weekly count of 273. As per the latest report, the Australian state of Victoria reported 177 new infections on Monday, while New South Wales (NSW) recorded 14 news cases. Whereas, the 22,943 tests were conducted in Victoria in the past 24 hours. The national death losses have crossed 100 marks, with 108 deaths reported. As in result, the Australian government recently tightened state-border restrictions and refrained easing the lockdown restrictions during the last week. However, this pandemic concerns kept the lid on any additional gains in the AUD/USD currency pair.

Despite concerns about the ever-increasing coronavirus cases across the world, the investors still think that the worst of the pandemic is over, witnessed by the positive economic data which continuously fueled expectations for a V-shaped global economic recovery and consistently provided support to the upbeat global risk sentiment.

As in result, the broad-based U.S. dollar reported losses on the day, possibly due to the upbeat trading sentiment backed by multiple factors. Although, the losses in the U.S. dollar limited the currency pair gains. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.17% to 96.448 by 10:03 AM ET (3:03 AM GMT).5 GMT).

At the US-China front, the full-fledged war between the world's top two economies remained on the card as the U.S. government is expected to announce additional punitive measures on China due to the Hong Kong security law. Moreover, U.S. President Donald Trump announced on Friday that there would be no phase 2 trade deal with Beijing soon, which initially weighed on risk sentiment. In return, China's Foreign Minister recently said that they would impose sanctions on U.S. lawmakers that also added strength to the risk-off market sentiment.

In the absence of significant data/events on the day, the market traders will keep their eyes on the USD price dynamics and coronavirus headlines, which could play a key role in influencing the intraday momentum. As well as, the traders will keep their eyes on the news concerning U.S./China.


Daily Support and Resistance

S1 0.6856

S2 0.6902

S3 0.6925

Pivot Point 0.6947

R1 0.6971

R2 0.6993

R3 0.7038

Looking at the technical outlook, the AUD/USD pair is trading with a bullish bias at 0.6992 level. This resistance level is prolonged by the triple top, which can be observed on the 4-hour timeframe. Now, we should look for bullish trades above the 0.6990 mark. The AUD/USD pair can proceed following a further high level of 0.7030. Alternatively, selling bias could be seen beneath 0.6990 unto 0.6930. Good luck!

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