AUD/USD Forecast: Resurgent Coronavirus Contagions Weigh On The Aussie

Key Points:

• The Australian government announced a six-week lockdown in Melbourne.
• The Reserve Bank of Australia left the cash rate unchanged at 0.25% as expected.
• AUD/USD is technically neutral and holding above the 0.6900 level.

The AUD/USD pair is finishing Tuesday with modest losses in the 0.6950 price zone, retreating from a daily high of 0.6997. The Aussie ignored the RBA monetary policy announcement, as the central bank left its cash rate unchanged at 0.25% as widely anticipated. As they did in their previous meeting, policymakers said that the downturn has been less severe than earlier expected, yet at the same time, remained cautious about longer-term developments amid uncertainty related to the coronavirus pandemic.

Instead, the Aussie fell on news that the government announced a six weeks lockdown in all Metropolitan Melbourne and other surrounding cities amid a new outbreak with 191 new COVID-19 CASES reported. Australia won’t release macroeconomic data this Wednesday.

AUD/USD Short-Term Technical Outlook

The AUD/USD pair is neutral in the short-term, although the downside potential remains limited amid broad dollar’s weakness. In the 4-hour chart, the pair is struggling to hold above its 20 SMA, but well above the larger ones, while technical indicators have pared their slides and stabilized around their midlines. A steeper decline could be expected on a break below the 0.6895 support, although buyers may likely reappear ahead of the 0.6800 thresholds.

Support levels: 0.6930 0.6895 0.6850

Resistance levels: 0.6995 0.7020 0.7060