AUD/USD tumbles to test 0.7350 amid notable US dollar demand

• AUD/USD remains exposed to further downside risks, nears 0.7350
• US dollar’s demand remains unabated amid risk-aversion at full steam.
• Victoria extends lockdown, Delta covid strain flareups unnerve investors.  

AUD/USD is fast approaching 0.7350, meandering at the lowest levels since December 2020, as the bears remain unstoppable amid a relentless rise in the US dollar across the board.

The greenback remains in demand at the expense of the risk-sensitive assets such as the aussie dollar, as the spread of the delta coronavirus variant globally unnerves investors' confidence in the economic recovery.

Amid a flareup of Delta covid cases in Australia, the country’s no.2 most populous state of Victoria extended lockdown after recording 16 new cases. Meanwhile, New South Wales NSW registered 98 news infections and the fifth death from the Delta outbreak.

 The extended lockdowns and covid cases surge in Australia have pre-empted many economists to downgrade their economic forecasts and push back the Reserve Bank of Australia (RBA) rate hike expectations, flagging concerns for the local currency.  

Meanwhile, the greenback will continue to stand tall amid a flight to safety and uncertainty of the Fed’s path to monetary policy normalization, given the recent mixed US economic data and conflicting messages from Fed Chair Jerome Powell last week.

Read: AUD/USD Price Analysis: Seen falling to 0.7350 after breaching key daily support

Exerting additional downward pressure on the aussie seems to be the latest concerns expressed by US Secretary Janet Yellen on the American-Sino trade deal. The former Fed Chair Yellen said that the China trade deal didn’t address ‘fundamental problems.’

Yellen said: “Tariffs are taxes on consumers. In some cases, it seems to me what we did hurt American consumers, and the type of deal that the prior administration negotiated really didn’t address in many ways the fundamental problems we have with China.”

In the day ahead, the pair will continue to take cues from the broader market sentiment and the dollar’s price action amid a data-light start to a fresh week. Attention turns towards the July RBA meeting’s minutes, which will be released on Tuesday.

AUD/USD technical levels to consider