The AUD/USD currency pair on Friday bounced off the current 7-day lows to surge above 0.6950 after a weak US ISM Manufacturing PMI. The currency pair had plunged earlier in the week to fall below 0.6935 coming off the back of a major rally that started on December 17, 2019.
The currency pair’s rebound today helped the Australian Dollar to trim the new year losses incurred against the US dollar. This also pushed it off the oversold levels of the RSI indicator in the 60-min chart.
AUD/USD Fundamentals Overview
From a fundamental perspective, the AUD/USD currency pair is trading at the back of a key event in the US market following the release of the latest round of economic data. On Friday, the US ISM Manufacturing PMI for December plunged to 47.2 down from 48.1 in the previous month. It also missed the highly optimistic expectation of 49 thereby sending the US dollar crumbling against rival currencies.
On the other hand, the ISM Prices Paid beat the expectation of 47.5 with 51.7 while construction spending for November impressed with a 0.6% rise (MoM) versus an expectation of 0.3%. The ISM-NY Business Conditions Index for December edged lower to 39.1 down from 50.4 in the previous month.
Earlier in the week, the Australian RBA Commodity Index SDR improved to -2.1% up from -5% beating the expectation of -10.9%. The Commonwealth Bank Manufacturing PMI beat the expectation of 49.2 with 49.4.
AUD/USD Technical Analysis (the 60-min Chart)
Technically, the AUD/USD currency pair appears to be trading in an ascending channel, which indicates a short-term bearish bias in the market sentiment. The currency pair has recently bounced off the trendline support following today’s disappointing US ISM manufacturing data.
Therefore, the bulls will be targeting short-term profits ta around 0.6985, 0.7000 or higher at 0.7032. On the other hand, the bears will hope for a quick pullback towards 0.6935, 0.6013 or lower at 0.6833.
AUD/USD Technical Analysis (the Daily Chart)
In the daily chart, the AUD/USD currency pair appears to have recently made a bullish reversal within a descending channel. This indicates an attempt by the bulls to take control in the long-term but the bears are resilient to hold firm.
Therefore, the bears will be targeting long-term profits at around 0.6866, 0.6756 or lower at 0.6671 going into the weekend. On the other hand, the bulls will hope to complete the reversal by targeting profits at around 0.7038, 0.7093 or higher at 0.7185.