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Aussie could continue to underperform
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The Aussie underperformed against the majority of the leading currencies during Monday's trading session. The AUD/USD dropped lower from 0.7235 to 0.7205, down by 0.4%, after the Reserve Bank of Australia's (RBA) deputy governor Guy Debelle commented that a weaker Aussie might be good for the Australian economy.To get more news about WikiFX, you can visit wikifx official website.
Debelle mentioned that the board is currently watching the developments in the forex market. Although an intervention might not be effective, a lower AUD exchange rate might be beneficial to the Australian economy, he added. The crash in the AUD/USD pair in recent weeks comes after the pair had rallied by over 1,700 pips over the past six months.
The Aussie might continue to underperform against the Greenback after the US Dollar went higher across board on Monday as the number of Coronavirus cases increase in Europe and Australia. If the risk-aversion continues, then the AUD/USD pair will likely drop lower during the day.
At the moment, AUD/USD is trading below the 20-day moving average and could close the day below the 20-day moving average of 0.7196. A breakdown of this critical technical barrier will increase the possibility of changing the medium-term trend of the pair from bullish to bearish.Analysts and market participants will be eagerly awaiting the commentary from Fed Chair Powell due later this week as it might slow down the Greenback with talks of more monetary intervention from the Fed. If that happens, then the Aussie might get a breather, and the AUD/USD pair might perform better. However, if the upcoming release of global PMI data disappoints, then traders would reignite risk-aversion, and that could see the AUD/USD plunge lower.
The AUD recorded losses against other leading currencies. The AUD/JPY pair plummeted from 75.73 to 75.45, following the negative comments from Debelle amid Tuesday's Asian session. The pair suffered its most significant loss in two weeks on Monday as the global markets praised the risk-aversion wave. AUD/JPY sharply fell from 76.221 to 75.609 on Monday, and at the current rate, it could likely drop further over the coming hours.
Traders are rushing to the Yen at the moment due to the increasing talks regarding the national lockdowns in the UK and Europe backed by the recent rise in Covid-19 cases in the region. Furthermore, the US-China tension is another catalyst that could be negatively affecting the Aussie as China is the largest customer of Australia. The US Secretary of State, Mike Pompeo, recently thanked France, Germany, and the UK for their joint effort in rejecting China's claims in the South China Sea at the United Nations (UN). While the event intensifies the rivalry between the US and China, China losing the claims indirectly affects Australia and the Aussie.
The AUD/JPY pair is in a bearish trend as it is currently trading below the 100-day moving average. Further risk aversion in the market could see the pair drop lower and likely approach the 200-day moving average of 72.9. Following the recent market performance, the pair's 50-day SMA is at its lowest since August 03, while bearish MACD signals for AUD/JPY indicate further downside. The Aussie could really do with any good news at the moment to help it shake off the bearish trends.