AUD/USD: Buyers and sellers jostle around 0.6600 as coronavirus keeps the driver’s seat

• AUD/USD remains under pressure as coronavirus headlines gained more traction.
• Additional cases from the European countries, threats from the contagion keep the risk-tone heavy.
• The greenback weakness keeps the pair’s downside limited.

AUD/USD carries the New York session’s downbeat sentiment forward while taking rounds to 0.6600 at the start of the Asian session on Wednesday. While the coronavirus-led risk-off keeps the risk barometer under pressure, weakness in the US dollar restricted the pair’s losses.

Coronavirus spreads outside China, Europe in focus…

Croatia, Switzerland, Spain and Austria are the latest to join the league of European countries infected with the deadly coronavirus (COVID-19). Further, numbers from Iran and Italy, not to forget South Korea and Hong Kong, also signal threats as far as the Chinese contagion of the respiratory virus is concerned.

On the contrary, fears of coronavirus seem to recede inside China with major provinces reducing warning levels and talks of a cure to the disease being found also taking rounds.

“COVID-19 developments continue to dominate headlines, and with more and more estimated impacts on global growth hitting the wires investors are getting increasingly nervous. This devastating situation is evolving rapidly, with cases outside of China firmly in the spotlight,” said analysts at the Australia and New Zealand Banking Group (ANZ).

US Dollar Index stays on the back foot…

Amid the broad risk-off, the US 10-year treasury yields revisited the multi-year low of 1.32%, at 1.35% currently, whereas Wall Street benchmarks were down close to 3.0% each by their end of trading on Tuesday.

The risk-off sentiment failed to benefit the US dollar as traders were concerned about the Fed’s next move amid the major declines in the US bond yields and stocks. That said, the US economic calendar also flashed mixed signals and added confusion into the AUD/USD pair traders’ minds.

Investors will now focus on Australia’s fourth quarter (Q4) Construction Work Done data, up for publishing at 00:30 GMT, expected -1.0% versus prior -0.4%, for immediate direction. However, the coronavirus updates will keep the driver’s seat.

Technical Analysis

While oversold RSI and repeated failures to slip below 0.6600 favor the pullback to 0.6620, as per the Technical Confluence Indicator, 0.6585 also becomes a live possibility concerning the broad risk-off.