• AUD/USD is closely correlated to the performance of US equities and is falling in tandem.
• US earnings and Aussie jobs market data will be key for AUD/USD.

At the time of writing, AUD/USD is trading at 0.6939, the lows of the day and has fallen from a high of 0.6992. 

As per the start of the week's analysis, the price is in the barroom brawl, trading between breakout support and resistance levels on the longer-term time frames: Chart of the Week: AUD/USD bears seeking a double top for H&S downside targets

Technically, there are arguments for both ways fro a technical standpoint, but so long as US equities can withstand the spread of the coronavirus, investors will buy them which has been supportive to risk-FX of late, such as the Aussie. 

However, Australia is experiencing a severe Covid-19 wave of its own which has forced Victoria into a lockdown. Until there is a significant slow down in cases, AUD could struggle to gain traction much beyond 0.7000, especially with the Labour data in Australia this week.

We pencil in a rebound as lockdown restrictions were eased in June. A rebound would be consistent with a number of surveys such as Seek and ANZ job ads over June as well.

As such we are expecting a pickup in the participation rate to 63.4%, but we have the unemployment rate easing a touch to 7% on our assumption the population declined 30k on the month,

analysts at TD Securities explained. However, fresh lockdowns could well neutralise anything positive in the June data. 

Eyes turn to earnings

S&P 500 Index Forecast: Bank's earnings in focus, COVID-19 induced insolvency fears simmer away

The S&P 500 will be a key theme on Q2 earnings this week and traders watching the banks for guidance. AUD will likely be tracking the sentiment on Wall Street, so it will be a key event. 

AUD/USD levels