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AUD/USD extends intraday recovery from 11-year lows, back near 0.6600 mark

  • AUD/USD finds decent support near 0.6300 mark and rallies around 300 pips intraday.
  • Fiscal stimulus hopes extended some support the aussie and triggered short-covering.
  • Collapsing US bond yields continued weighing on the USD and remained supportive.

The AUD/USD pair has now moved to the top end of its daily trading range, with bulls now looking to build on the momentum further beyond the 0.6600 level.

The pair witnessed a dramatic intraday turnaround the 0.6300 mark and recovered nearly 300 pips from the early Asian session flash crash to the lowest level since March 2009 hopes of a stimulus package from the Australian government.

It is worth reporting that Australian Prime Minister Scott Morrison revealed on Monday that his government is considering a Kevin Rudd-style cash handout as part of its multi-billion-dollar coronavirus stimulus package to keep the economy going and people in jobs.

Apart from this, the strong recovery lacked any obvious catalyst and seemed rather unaffected by a modest US dollar rebound. The key USD index managed to reverse an early slide to sub-95.00 levels, or 1-1/2 year lows touched in the wake of collapsing US Treasury bond yields.

Growing worries about the uncontained spread of the deadly coronavirus, coupled with a plunge in crude oil prices triggered a fresh wave of the global risk aversion trade and forced investors to take refuge in the so-called traditional safe-haven assets.

Apart from a broad-based selloff across the global equity markets, firming market expectations that the Fed will 
deliver another 50 bps interest rate cut on March 18 aggravated the recent slump in the US bond yields and underpinned the greenback demand.

As investors assessed the economic impact of the virus outbreak, it will be interesting to see if the pair is able to capitalize on the recovery move or runs into some fresh supply at higher levels amid absent relevant market moving economic releases from the US.

Technical levels to watch

 

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