Is the AUD Still a Short as It Heads to 73 Cents?

Is the AUD Still a Short as It Heads to 73 Cents?

Covid Impact on Australia

Covid-19 lockdowns remain a key concern, particularly in New South Wales, Australia’s most populous state. The Delta variant continues to spread rapidly, prompting the Australian government to extend lockdown measures. This situation is affecting businesses and daily life across the country, adding downward pressure on the AUD. The prospect of stricter lockdowns could worsen the economic outlook, keeping the AUD weak.

Technical Perspective of AUD/USD

From a technical standpoint, the AUD/USD pair has been in a downtrend since its high in February 2021. Currently, the price is consolidating between the 38.2% and 61.8% Fibonacci retracement levels, with the 50.0% level acting as resistance. The general sentiment remains bearish, with many traders viewing the AUD as a short position. The 61.8% Fibonacci level is now a critical target for bearish traders. A drop below this level (around 0.73800) would signal a six-month low, reinforcing the downward trend.

Outlook for the AUD

The sentiment is largely focused on the AUD remaining a short position, at least until it drops below the 61.8% Fib level. Should the AUD break through this level, it could stay within this range for an extended period, especially given the ongoing pressure from the economic impacts of Covid-19 and global market conditions.

ASX 200’s Performance

On the local stock market front, the ASX 200 has been an outlier, closing higher than it opened on Thursday’s Asian session. However, global markets have faced significant sell-offs, particularly in Europe. The FTSE, CAC, and DAX all saw heavy declines, which could impact the Australian index. ASX200 futures indicate that Friday’s trading will open with a slight decline, which could add further pressure to the AUD.

Conclusion

In conclusion, the technical and fundamental factors suggest that the AUD remains vulnerable to further declines, with 0.73800 as a key level to watch.