Coronavirus Outbreak In Sydney Keeps AUD Under Pressure

After dropping as low as 0.7449 in the European morning AUD/USD recovered and closed around neutral levels. The pair last up 5 pips at 0.7481.

• On the coronavirus front Sydney reported its first COVID-19 related death in 2021 yesterday, case numbers are on the rise and NSW Premier Berejiklian warned that the number of infections is set to rise further. CBA sees AUD under pressure due to the outbreak: "The worsening Covid‑19 outbreaks in Sydney is keeping AUD under pressure in our view. Despite the recent pick‑up in pace, Australia's vaccination rate remains low. The risk is the current Sydney lockdown is extended and/or tightened and drags on the Australian economy."
• From a technical perspective AUD/USD traded lower last week and the pair is approaching key short-term support. Price recently found resistance at 0.7599, Jul 6 high. The outlook remains bearish and the focus is on 0.7371, the bear channel base drawn off the Feb 25 high. The recent move lower maintains the price sequence of lower lows and lower highs and moving average studies remain in bear mode. Initial resistance is at 0.7534.
• Markets await the NAB Business Survey for June due later today, while China trade data also due today could provide a catalyst for AUD.