AUD / USD extends losses and approaches three-week lows at 0.7055

• The AUD / USD reversal from 0.7115 extends to the session lows at the 0.7160 area.
• The Aussie loses ground as market sentiment souls.
• The pair is approaching a three-week low at 0.7055.

The Aussie is accelerating its downtrend from the highs of 0.7115 in the US session on Monday, as market sentiment deteriorated on US reports.

Aussie reversal accelerates as risk appetite wanes

AUD / USD opened the week on a solid footing, fueled by upbeat Chinese GDP data. The Asian giant’s economy expanded at an annual rate of 4.9% in the third quarter, showing strong industrial production and consumption figures, which points to a strong recovery from the pandemic.

Demand for the Australian dollar was also supported by positive market sentiment about hopes for a fiscal stimulus deal in the United States, after House Representative Nancy Pelosi suggested the deal was possible. The pair, however, capped just above 0.7100 and fell back during the US session, accelerating its downtrend with equity markets in the red as hopes for US stimulus fade.

AUD / USD approaching a key support level at 0.7055

In its downtrend, the Aussie has reached session lows 10 pips below October 15’s low of 0.7055. A sustained break below here would resume the downtrend from the October 9 highs, pushing the pair towards 0.7005 (September 25 low) and 0.6920 (July 7 and 10 lows). On the upside, the pair should regain the 100-day SMA at 0.71000 to regain the bullish momentum and extend towards 0.7200 (50-day SMA) and 0.7240 (October 9 high).