On Wednesday, the AUDUSD pair opened in the green zone below the 0.6000 mark and continued its rally. The major gained nearly 100 pips and surged towards 0.6050 amid the weakened USD and improved risk sentiment on the markets.
Today after long discussions, the US Senate and the Trump administration managed to agree on a $2 trillion stimulus package to rescue companies, workers and healthcare system and aid the economy heavily hit by the coronavirus outbreak. The deal was finally struck after two failed attempts to get enough votes in the Senate. This announcement boosted risk-on and helped the Aussie to gain traction. At the same time, the pressure on the US Dollar heightened and the DXY stuck in the mid-101.00 region.
Despite the market’s joy about the new stimulus program, the euphoria may not last long as coronavirus continues its race all over the globe. Amid the spike in the number of new cases in the US the WHO warned that the United States may become the new epicenter of COVID-19. Despite the shutdowns, the death toll in France surpassed 1,000 people while more than 400,000 all over the world were tested positively for coronavirus. Poland, India, and Egypt joined the list of countries that imposed lockdowns.
Thus, as the panic may return to markets any time soon it would be prudent to refrain from any aggressive bets on the further major’s rally. Today, Australia will not deliver any releases while in the NA docket the US will publish the Durable Goods Orders, the Housing Price Index and the EIA Crude Oil Stock Change that may have some influence on the pair’s dynamics. On Thursday, G20 leaders will hold a videoconference to discuss current coronavirus situation and measures to curb its spread and cushion its economic impact.
From the technical point of view, the AUDUSD pair trades in the wide daily range of 0.5937-0.6048 and broke its SMA200 (today at 0.5950) on the 1-hour chart. While investors prefer risk assets amid the improved market’s mood, the pair will likely continue its march north. However, if risk-off seizes markets again, the Aussie may lose its traction. The resistance is at 0.6150, 0.6275 and 0.6385 while the support is pegged at 0.5865, 0.5695 and 0.5510.