After a brief bounce, the Aussie came under the selling pressure and is nearing the multi-year lows around 0.63 registered at the start of the week. The pair has accelerated the decline amid broad-based dollar strength due to the coronavirus panic. A wide-spread risk aversion makes traders reluctant to add long positions on high-yielding currencies, including the Australian dollar.
Moreover, the Aussie is affected by low oil prices this week. Brent struggles to regain ground following a plunge to $31 on Monday. Today, the prices are clinging to the $33 handle, holding relatively stable in comparison to stock markets plunging across the board. Anyway, the situation in the oil market remains fragile, and the selling pressure may intensify at any point, which would add to the selling pressure surrounding the Australian currency.
In Australia, the government said it would pump 11.4 billion dollars into the economy, in an effort to counteract the recession risks stemming from the coronavirus outbreak. The officials also plan to extend the travel restrictions following the official pandemic declaration. Yesterday, the rating agency S&P warned about a possible recession in Australia in the first half of this year.
AUDUSD dipped to lows around 0.6315 and may threaten the 0.63 handle if the selling pressure persists in the near term. On the other hand, this level may act as a support zone that will give way to a bounce, but on the condition that the USD demand wanes. Should the pair stage a reversal from the current levels, the immediate important upside target will arrive at 0.6460. Once above, the prices may extend the rebound to 0.6540.
In a wider picture, the Aussie remains far below all the three moving averages while the weekly RSI is pointing south but is yet to enter the oversold territory, suggesting the downside potential persists. Should the pair derail the 0.63 figure, fresh multi-year lows will come into focus before the AUD stages a bounce.