AUD/USD trades with modest losses below 0.7100 mark

• Firming expectations that the RBA will ease in November undermined the Australian dollar.
• Fresh coronavirus jitters benefitted the safe-haven USD and exerted pressure on AUD/USD
• Investors now look forward to the US macro data for some short-term trading opportunities.

The AUD/USD pair remained depressed through the early European session and was last seen hovering near the lower end of its daily trading range, around the 0.7075-70 region.

The pair witnessed some fresh selling on the last trading day of the week and drifted back closer to the previous day's near three-week lows amid expectations of further policy easing by the RBA. It is worth recalling that the RBA governor Philip Lowe provided a strong indication on Thursday that the central bank might cut interest rates, or announce further stimulus measures at its next meeting in early-November.

This comes on the back of growing market worries about a steep rise in new coronavirus cases, which could lead to new lockdown restrictions and hinder the global economic recovery. This, in turn, benefitted the US dollar's relative safe-haven status and further collaborated towards driving flows away from the perceived riskier Australian dollar.

Meanwhile, signs of stability in the equity markets, along with a softer tone surrounding the US Treasury bond yields capped any strong gains for the buck and might help limit losses for the AUD/USD pair. This makes it prudent to wait for some follow-through selling below the overnight swing lows, around the 0.7055 region, before positioning for any further near-term depreciating move.

Market participants now look forward to the US monthly Retails Sales figures for a fresh impetus. Friday's US economic docket also features the Industrial Production data and the preliminary estimate of the October Michigan Consumer Sentiment Index. The data, along with the broader market risk sentiment will influence the USD price dynamics and produce some short-term trading opportunities.

Technical levels to watch