AUD/USD drops back to revisit near 0.6600 region as coronavirus fears intensify

• AUD/USD gaps down at the start of the week.
• US dollar pulls back after heavy fall registered during the recent days.
• Coronavirus fears continue to weigh on risk-tone, an increase in cases in the US and Europe are the major worries.
• The economic calendar might play a little role amid COVID-19 being on the driver’s seat.

Following its run-up to 0.6658 on Friday, AUD/USD gaps down to 0.6609, currently around 0.6605, at the start of Monday’s Asian session. While the broad US dollar weakness helped the Aussie pair to mark gains on Friday, the weekend headlines concerning the coronavirus (COVID-19) as well as a retracement of the previous week’s greenback shorts favor the recent declines.

Coronavirus fatalities increase, Italy grabs the attention…

With more than 100,000 cases across the globe, the virus becomes a serious challenge to the global economy as well as trade. However, what’s of major concern is the rising pace of spread and a lack of major response from the US.

Details suggest, the Italian government has locked down Lombardy, including Milan, which will affect a major portion of the nation’s population while 25% of them are now quarantined including the leader of Italy's Democratic Party.

Elsewhere, South Korea marked the lowest daily increase with 272 cases whereas four cases each have been confirmed from Bulgaria and Saudi Arabia. Furthermore, infections in the UK surged to 206 while Florida reports two deaths and the number of cases on the Grand Princess cruise ship stranded around San Francisco has reached 21 and 19 of those are crew members.

Amid all these, the US authorities have been alleged to have a soft response to the global pandemic with Vice President Mike Pence confirming a lack of testing kits on Friday whereas the US President signaling the lesser need of $8.3 billion packages despite signing the bill passed by the House.

The risk-tone kept it on the negative side with US 10-year treasury yields at the record low near 0.75% following Friday’s plunge.

Looking forward, investors will keep eyes on the COVID-19 headlines for fresh impulse while a lack of major data/events on the economic calendar will also increase the importance of qualitative catalysts.

Technical Analysis

The quote remains stuck near 0.6600 with 21-day SMA near 0.6635 limiting the upside while 10-day SMA near 0.6585 acting as a downside barrier.