AUD/USD surrenders early recovery gains, hangs near multi-year lows
- AUD/USD failed to capitalize on its early attempted recovery from fresh 11-year lows.
- The prevailing risk-off mood benefitted the USD’s safe-haven status against the aussie.
- Near-term oversold conditions might turn out to be the only factor lending some support.
The AUD/USD pair surrendered early modest recovery gains and has now retreated to the lower end of its daily trading range, below mid-0.6100s.
The pair managed to reverse an early dip to sub-0.6100 levels, or fresh 11-year lows, and rallied over 200 pips intraday in reaction to the Fed's emergency decision to slash its key interest rates to zero.
The US central bank also announced a fresh round of quantitative easing and pledged to restart buying a total of $700 billion in US Treasuries/mortgage-backed securities to shore up economic growth.
The latest move triggered a fresh leg down in the US Treasury bond yields and weighed heavily on the US dollar, which turned out to be one of the key factors that prompted some short-covering bounce.
However, bulls failed to capitalize on the attempted recovery move further beyond the 0.6300 mark amid the prevailing risk-off mood, which drove flows away from perceived riskier currencies – like the aussie.
Mounting fears about the economic impact of the coronavirus pandemic continued denting the global risk sentiment, which further benefitted the USD's status as the global reserve currency and exerted some fresh pressure.
It will now be interesting to see if the pair can find any support at lower levels amid oversold conditions or continues with its bearish trajectory as investors await fresh developments around the coronavirus saga.
Technical levels to watch