AUD/USD down 0.5% to 0.7290

AUD/USD D1 21-07

It has been a rough period for the aussie in the past week as hopes of any hawkish tilt by the RBA in the months are dashed as the virus situation worsens domestically.

That adds to the struggles to lift consumption activity, with the June retail sales disappointing heavily amid lockdown measures in Victoria last month.

As such, worsening domestic fundamentals also do not reflect well on labour market prospects and that will make the RBA less likely to shift away from its dovish stance.

That puts quite a bit of divergence between the RBA and some of its counterparts like the RBNZ, BOC, BOE, and also the Fed to some extent.

From a technical perspective, the drop in AUD/USD isn't a pretty one since taking out the 21 December low @ 0.7462. It has been one-way traffic over the past five days and there is little support left before getting to the 0.7200-30 region.

Below that, a push towards testing 0.7000 again isn't out of the question - especially if the virus situation in Australia doesn't improve and as the Fed slowly gets closer towards considering taper discussions in the weeks/months ahead.