AUD/USD Pulls Back Off 2-Month Highs After US Markit PMIs

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The AUD/USD currency pair on Friday pulled back off yesterday’s 2-month highs of 0.6600 to trade at around 0.6520 following the latest US PMIs. The currency pair has been trading within a slightly rising wedge since the middle of April, off a preceding sharper ascending channel.

The currency pair has now dropped to trade closer to the oversold levels of the 14-hour RSI in the 60-min chart. The pair is now pinned between the 100-hour and the 200-hour SMA lines.

AUD/USD Fundamentals Overview

From a fundamental perspective, the AUD/USD currency pair is trading at the back of a relatively busy week in the US market. On Tuesday, US building permits for April beat the (MoM) expectations of 1M with 1.074M. However, Housing Starts came short of 0.927M with 0.891M. On Thursday, the Philadelphia Fed Manufacturing Index for May missed the expected reading of -41.5 with -43.1. 

The preliminary US Markit Manufacturing PMI for May came in at 39.8, which beat the expectation of 38. The Services PMI also outperformed with 36.9 versus 30. Existing Home Sales for April came in slightly better than expected at 4.33M versus 4.3M. However, initial and continuing claims disappointed after posting 2.438M and 25.073M, respectively versus expectations of 2.4M and 24.765M.

In Australia, the preliminary Commonwealth bank Manufacturing PM for May missed the expectation of 46.5 with 42.8.

AUD/USD Technical Analysis (the 60-min Chart)

Technically, the AUD/USD currency pair appears to be trading within a gently ascending wedge in the 60-min chart. This indicates a slight short-term bullish bias in the market sentiment. The pair is now testing the trendline support, which could trigger a short-term rebound.

The bulls will be targeting rebound profits at around 0.6587 or higher at 0.6650. On the other hand, the bears will target short-term pullback profits at around 0.6460 or lower at 0.6388.

AUD/USD Technical Analysis (the Daily Chart)

In the daily chart, the AUD/USD currency pair appears to be trading within a descending channel. This indicates a long-term bearish bias in the market sentiment. The pair has recently rebounded to surge towards overbought levels of the 14-day RSI.

The bears will be targeting long-term pullback profits at around 0.6285 or lower at 0.5996. On the other hand, the bulls will look to extend the current rebound towards 0.6710 or higher at 0.7011.

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