The greenback is flexing its muscles once again
The dollar and yen are the two major beneficiaries on the day as the greenback is picking up from where it left off overnight, gaining against the rest of the major currencies bloc. AUD/USD has broken below the 0.7000 handle for the first time since the January flash crash and everything else just about hits a session low against both the dollar and the yen in European morning trade currently.
There’s no one exact reason to point towards the surge in the dollar since overnight trading but as mentioned earlier today, the simplest explanation is just that the dollar remains the best of a bad bunch. From a technical perspective, the dollar index is also breaking out to the topside and with EUR/USD looking to extend lower as well, this could be a solid day for the greenback if US durable goods orders data later helps to provide further tailwind for the currency.
As for AUD/USD, the lows now touch 0.6992 but I reckon if we breach levels around 0.6980 or lower, I would expect stops to be taken out and a sharper drop will ensue. For now, bids around 0.6990-00 may well just keep the pair afloat.