AUD/USD: Bulls and bears jostle around 0.7000 amid coronavirus woes

• AUD/USD attempts recovery from the week-start gap down to 0.6984.
• US dollar weakness, equity gains keep the bulls on the table despite virus worries at home.
• The government in Victoria makes it compulsory to use face cover and social distancing following a record spike in new cases.
• Aussie Treasurer Frydenberg suggests an extension of the loan scheme.

AUD/USD seesaws around 0.6990 at the start of the week’s trading on Monday. The Aussie pair initially offered a gap-down opening to the week from 0.6995 to 0.6988. Though, the fall couldn’t last longer than printing the low of 0.6984. It’s worth mentioning that the quote printed a fourth consecutive weekly gain by the end of the last week despite the coronavirus (COVID-19) worries at home.

Greenback weakness, equity gains supersede everything else…

The latest virus numbers from Victoria marked a record surge with 363 new cases. As a result, the government has been forced to make the masks compulsory while working, not to forget maintaining social distance, citing 80% contagion. On the other hand, figures from Texas suggest new cases rose over 7,300 with the death toll rising by 93 on Sunday. The data indicate that both Australia and the US are struggling with the pandemic’s resurgence. However, the later is more negatively affected and drags the US dollar down, which in turn helps the AUD/USD pair.

Friday’s US Michigan Consumer Sentiment Index gave an early signal that the American’s confidence is dwindling. However, equities remained mildly positive amid hopes of further stimulus. The same adds to the Australian dollar’s gains despite virus woes at home. Additionally, early signals of heavy aid package during this week’s announcements of the fiscal stimulus also keep the pair buyers hopeful.

On the contrary, fears of the virus and the US-China tension, coupled with mixed data at home, cap the pair’s upside momentum. As a result, the pair keeps struggling to find a firm push while gradually heading north.

Against this backdrop, the US 10-year Treasury yields struggled around 0.62% by the end of Friday’s closing. The move failed to defy Wall Street traders that managed to close the week on a mixed footing.

Moving on, lack of major data/events will keep traders searching for fresh clues from the qualitative risk catalysts like virus and the Sino-American tension. Also likely to affect the pair’s moves is any decision from the European Union (EU) summit where policymakers are divided over the much-awaited stimulus.

Technical analysis

Bullish Spinning top on the weekly chart adds to the traders’ confusion unless successfully breaking above 0.7035. However, bears are less likely to seek entries till the pair stays above 0.6930.