AUDUSD Leads Losses as Coronavirus Cases Continue to Rise; RBA Meeting Minutes Eyed

Summary:
• AUDUSD is leading losses among the majors today as concerns about the coronavirus once again hit headlines. Can the RBA meeting minutes provide support?

AUDUSD is leading losses among the majors in today’s Asian session as concerns about the coronavirus once again hit headlines. As of this writing, the currency pair is trading with a 0.52% loss at 0.6832. With the RBA monetary policy meeting minutes due tomorrow, will AUDUSD continue to slide or will it find support?

The continuous rise in coronavirus cases in the US has sparked jitters among investors once again. Over the weekend, cases in the country rose by over 1.4% which brought the total number to 2,094,058. With Beijing re-imposing lockdown measures because of a spike in its cases, market participants worry that the US may soon follow suit.

The Aussie is considered to be a risk currency because the RBA maintains higher interest rates compared to its counterparts. With this, AUDUSD tends to trade lower when risk aversion dominates market sentiment.

Speaking of the RBA, the central bank’s meeting minutes will be released tomorrow. In the last central bank meeting, RBA Governor Lowe sounded less pessimistic than expected when he said that the negative effects of the pandemic were not as bad as expected. Market participants are looking forward to clues about the RBA’s plans for its QE program. If the minutes reveal that there is no urgency to increase the purchase of bonds, AUDUSD could trade higher. On the other hand, if the report shows that the RBA intends to buy more in the future, AUDUSD could extend its fall.

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AUDUSD Outlook

On the 4-hour time frame, it can be seen that AUDUSD has slid below support the rising trendline (from connecting the lows of May 15, May 22, May 26, and May 29). A trendline break is often interpreted as a sign that the uptrend has been invalidated. It could be a sign that sellers are dominating market sentiment and that the currency pair could soon trade lower. If it does, AUDUSD may fall to 0.6670 where it could test its May 27 highs for support.

On the other hand, it’s worth pointing out that AUDUSD is currently testing support at its May 12 lows. If support at this price holds, we could soon see the currency pair trade higher. Near-term resistance is at 0.7030 where AUDUSD tapped its 10-month highs last week.