The AUD/USD pair headed south after a two-day rally, wiping out its weekly gains. Due to a lack of fundamental drivers and high-tier data releases on Friday, the pair is trading in an exceptionally tight range. The AUD/USD currency pair was trading at 0.7342 at the time of writing.
Earlier in the day, the data from Australia revealed that the HIA New Home Sales declined by 20.5% on a monthly basis in July following June’s increase of 14.8%. This reading seems to be making it difficult for the AUD to find demand ahead of the weekend. Meanwhile, the coronavirus-related lockdown in Canberra is putting additional weight on the currency.
On the other hand, the US Dollar Index (DXY) continues to move sideways below 93.00 on Friday, not allowing AUD/USD to make a decisive move in either direction.
Later in the day, the University of Michigan’s preliminary August Consumer Sentiment Index, which is expected to remain unchanged at 81.2, will be featured in the US economic docket.
AUD/USD near-term outlook
OCBC analysts think that AUD/USD could suffer heavy losses in the near term. “The surprise lockdown in Canberra adds a near-term negative for the AUD/USD,” analysts noted. “The recent range lows at 0.7290 are in focus, and any breach of that support opens the path towards 0.7200 and 0.7000 in a multi-week horizon.”