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  • AUD/USD gains on Monday amid better risk sentiment.
  • Dismal data from Australia couldn’t hurt much.
  • US Manufacturing PMI data can provide further stimulus to the market.

The AUD/USD daily analysis reveals an interesting picture. The price of the pair has been rising today. The Australian Dollar has been so far the strongest currency of the day.

The AUD/USD pair lost its traction on Friday and closed the week flat. After going higher during the Asian session on Monday, the pair remains supported by the upbeat market sentiment. The pair managed to bounce above the mid-0.7300 as the risk appetite soars.  As of writing, the AUD/USD is trading at 0.7369 with daily gains of 0.35%.

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Earlier today, the AiG performance manufacturing index fell to 60.8 in July, 63.2 in June. Commonwealth manufacturing PMI also fell to 56.9, which was 58.6 in June. Moreover, the ANZ job advertisement shrank by 0.5% after going up by 1.5% in June.

China’s monetary policy stimulus, joined with America’s infrastructure bill, boosts the market’s mood, negatively impacting the US Dollar for being a safe haven.

Despite the goodish rebound in Aussie, the bearish potential cannot be ignored as the coronavirus cases are emerging across the country, resulting in lockdown extensions.

The US Dollar has modestly lost strength ahead of PMI data. The macroeconomic data releases could not trigger a market reaction. However, the positive shift in the risk sentiment supported the Aussie through the earlier New York session. The US Dollar index is maintaining minor losses on the day, pricing just under the 92.00 handle.

The Reserve Bank of Australia will announce its monetary policy on Tuesday. Following July’s meeting of RBA, we know that the central bank is far away from the conditions of a rate hike. It is not likely to see a rate hike until 2023. On the other hand, we expect an extension of the QE program with a likely reduction in purchases.

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AUD/USD technical analysis: Reversal or correction?

The AUD/USD pair looks bullish on the day. However, the price remains capped by the congestion of 20 and 50 period SMAs on the 4-hour chart. The price is gradually moving within the uptrend channel. The 4-hour uptrend channel is a bearish flag pattern on the daily chart. The volume for today’s up wave is not quite encouraging. Hence, we expect the price to stay bullish only in the short term before resuming the broader downtrend.

AUD/USD 4-hour chart analysis
AUD/USD 4-hour chart analysis

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