- AUD/USD fell to the lowest level of 2021 on Monday.
- US Dollar Index is rising for the third straight day.
- Major equity indexes remain on track to open significantly lower.
The AUD/USD pair closed the last two trading days of the previous week in the negative territory and started the new week under bearish pressure. After touching its lowest level since late November at 0.7329, the pair managed a modest rebound and was last seen losing 0.72% on a daily basis at 0.7349.
Risk aversion on Monday is weighing on the AUD while providing a boost to the safe-haven greenback. Reflecting the dismal market mood, major European equity indexes are losing more than 2% and the S&P Futures are down 1.2%. Wall Street’s main indexes remain on track to open with a large bearish gap and AUD/USD is likely to have a tough time extending its recovery.
Meanwhile, the US Dollar Index is up 0.15% on the day at 92.85. There won’t be any high tier data releases from the US in the remainder of the day. On Tuesday, the Reserve Bank of Australia will release the minutes of its July policy meeting.
Economists at Credit Suisse think that AUD/USD could continue to fall toward 0.7200.
“With a major top in place we maintain our core bearish view with next minor support seen at 0.7379/72, then 0.7338 and then 0.7209 – the 78.6% retracement of the rally from last November,” economists said. “Whilst we would look for the 0.7209 support to hold at first, below in due course should see support next at 0.7159/45 and eventually our core objective at 0.7085/43 – the ‘measured top objective’ and 38.2% retracement of the entire 2020/2021 bull trend.”
AUD/USD resumes its downtrend, potential to plummet to the 0.7085/43 zone – Credit Suisse.
Additional levels to watch for