- Australian dollar’s rebound from 0.6285 finds resistance at 0.6400.
- AUD buoyed by higher oil prices and a brighter marked mood.
- FX experts warn that a weak post-COVID-19 recovery might weigh on the aussie.
The Australian dollar has posted a steady recovery over the last sessions, buoyed by a more positive market sentiment which has weighed on the safe-haven US dollar. AUD/USD has extended its rebound from Wednesday’s lows at 0.6280, to hit one-week highs at 0.6405 before pulling back to levels right below 0.6400.
The aussie appreciates on a risk-on market
Australia seems to have passed the peak of the COVID-19 virus and looks in a good position to be one of the first countries lifting the restrictions to lead the post-coronavirus recovery. With the rest of the major economies still locked up, this is offering support to the aussie.
On a longer-term, however, the AUD/USD might find some serious challenges. FX experts at ANZ warn that a weak economic recovery might hurt confidence on the AUD: “The global recovery is likely to be slower and shallower than hoped, and solvency is the issue that will come into focus. This will test the markets’ beliefs in central bank omnipotence. A renewed selloff in risk, triggered by solvency rather than liquidity concerns, will be sufficient to drive both the AUD and the NZD to fresh lows.
AUD/USD: capped below 0.6400 resistance
On the technical aspect, immediate resistance area lies at 0.6400 (Intra-day high, April 20 high). Above here, the pair might aim towards 0.6445 (April 14 high) and then 0.6540 (March 11 high). Support levels lie at 0.6280 (April 22 low), 0.6255 (April 21 low) and 0.6195 (April 8 low).
AUD/USD Key levels to watch