AUD/USD – Range Intact; Optimism Fading Due to China, US Payrolls Disquiet

The Australian Dollar managed to recover following the corrective move lower to 0.68822 overnight after the failure to break above the recent high at 0.6988. The Battler’s 24-hour range of 0.6880-0.6990 is intact for now. Risks to a break in that range are the ongoing China-US tussle as well as tonight’s US Payrolls numbers. A turnaround in risk sentiment and a lift in the Greenback will see the Aussie, one of the best performing currencies, experience a sharp downward correction.

AUDUSD Hourly Chart - ForexLive - 05 June 2020
AUDUSD Hourly Chart – ForexLive – 05 June 2020

Overnight, the yield differential between Australian and US 10-year bond yields narrowed to 19 basis points from 25 basis points yesterday. The Aussie 10-year bond yield rose 1 basis point to 1.01%. US 10-year rates rose 7 basis points to 0.82%. In FX 101, we learned that yield differentials matter.

AUD/USD has immediate resistance at 0.6990-0.7000 followed by 0.7050. Immediate support can be found at 0.6910 followed by 0.6880. A break of 0.6880 could see a corrective move back to 0.6780/0.6800. Meantime expect a pre-US NFP range of 0.6880-0.6980. Prefer to sell rallies.

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