- Falling yields and mixed Chinese and Australian data continue to weigh the AUD/USD.
- The Caixin Services PMI fell to 52.9 in January from 53.1 in January’s forecast.
- Australia’s retail sales grew by an impressive 8.2% in the fourth quarter.
The AUD/USD price outlook remains in trouble despite a minor upside correction as the US dollar is recovering while the upbeat Aussie data could not boost momentum.
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On Monday, China released dismal data on its comeback during the Asian session, causing the AUD/USD pair to a pullback in a corrective manner. In addition to geopolitical tensions surrounding Russia, the AUD/USD pair will also be challenged by the market’s decision about what the US Federal Reserve System (FRS) and the Reserve Bank of Australia (RBA) will do next.
Compared to a consensus estimate of 52.9 and 53.1 in December, the China Caixin Services PMI dropped to 51.4 in January.
Australian retail sales, which surged to an all-time high earlier in the day, impressed AUD/USD buyers. Despite inflation, retail sales rose 8.2% to A$93.2 billion ($65.90 billion) in the quarter, according to the Australian Bureau of Statistics (ABS). Reuters reported that it was the largest increase on record, surpassing predictions of 8.1%.
The fall in US Treasury yields is also helping AUD/USD traders pare recent losses after the pair has fallen for two straight days. It is noteworthy that the US jobs report prompted the US dollar to recover from a three-week low, reducing the Australian dollar’s weekly gains almost in half.
Nevertheless, 10-year US Treasury yields are currently falling from a two-year high, while US and Asia-Pacific stock futures are falling.
The recent sideways movement of the AUD/USD pair came about due to the Fed’s decision for its next move, along with dovish hopes from the Reserve Bank of Australia (RBA).
AUD/USD traders may find the week slow to start, but the return of China from a week-long break may keep them on their toes.
AUD/USD price technical outlook: Upside looking shallow
The AUD/USD price is trying to correct higher after Friday’s plummet. The 4-hour chart shows a widespread down bar with a huge volume. Afterward, we see small up bars with decreasing volume. It indicates that the upside is shallow and may resume the downtrend around 0.7100 resistance level, which coincides with the 20-period SMA.
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The resumption of downtrend may find support levels around 0.7050 ahead of 0.7000 and then the yearly lows around 0.6960 area.
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