AUD/USD breaks below 0.7200 and reaches a two-month low near 0.7130s on risk aversion

• The Australian dollar falls some 0.92% on Monday amidst a dismal market mood.
• China’s coronavirus outbreak and the US central bank’s aggressive hawkish tilt spurred a flight to safe-haven assets.
• AUD/USD Price Forecast: The break of the 200-DMA opened the door for further AUD/USD weakness.

On Monday, the AUD/USD fell sharply in the middle of a dampened market mood trading day in the financial markets, courtesy of China’s coronavirus outbreak which has spread to some districts of Beijing, threatening to slow down the world’s second-largest economy, and fears of a Federal Reserve aggressive tightening. At 0.7179, the AUD/USD is down and about to record losses of 0.94%.

China’s coronavirus spread to Beijing might slow its economy, commodities fall

The market sentiment, as previously mentioned, keeps global equities under pressure, except for the tech-heavy Nasdaq Composite, up 0.42%. Also, commodities keep heading south amid China’s growing concerns, as shown by oil, precious and base metals, which record losses. That also weighed on the pair, as the Australian economy heavily depends on China. Furthermore, Iron ore prices recorded losses of 12%, a headwind for the AUD/USD.

In the meantime, the greenback remains underpinned by increasing bets that the Federal Reserve would hike rates by 50-bps, as shown by Short Term Interest Rates (STIRs), fully pricing in a 0.50% increase. The reflection of the aforementioned is the US Dollar Index, edging up 0.57%, sitting at 101.698.

Data-wise, the Australian and US economic docket would have some tier 1 data to release. The Consumer Price Index (CPI) for Q1 will be revealed in Australia. Across the pond, the US Gross Domestic Product (GDP) for Q1 is expected to show some growth, but at a much slower pace than last year.

AUD/USD Price Forecast: Technical outlook

The AUD/USD broke several daily moving averages (DMAs) on its sharp fall, including the “trendsetter” 200-DMA lying at 0.7291, which denotes bullish/bearishness on an asset, depending on the location of the price. Worth noting that the Relative Strength Index (RSI) accelerated its downward trend, but at 33.05, it still has some room to spare in the case of further AUD/USD weakness.

Therefore, the AUD/USD first support would be the March 15 cycle low at 0.7165. A breach of the latter would expose the April 25 daily low at 0.7134, followed by the February 24 daily low at 0.7095.