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  • AUD/USD has backed off from session highs, possibly due to weak China data. 
  • The bullish RSI divergence on the daily chart is still valid and suggests scope for a rise to resistance at 0.6774.

AUD/USD is currently trading near 0.6605, having clocked a session high of 0.6615 an hour ago. 

Australia’s economy grew by a better-than-expected 0.5% in the December quarter and  2.2% over the past year, the official data released at 00:30 GMT showed. Even so, the AUD has pulled back from session highs. 

The bid tone may have weakened in response to the dismal China data released about 30 minutes ago. The Caixin/Markit services purchasing managers’ index (PMI) almost halved to just 26.5 in February from 51.8 in January. A reading below 50 indicates contraction. 

However, despite the pullback from 0.6615, the bias remains bullish, as the positive divergence of the 14-day relative strength index confirmed by Tuesday’s 0.74% gain is still valid. Only a break below the recent low of 0.6434 would invalidate the bullish divergence. 

The pair, therefore, remains on track to test the resistance of the trendline falling from Jan. 2 and Jan. 16 highs. At press time, the trendline hurdle is located at 0.6652. A close higher would confirm a bullish reversal and will likely bring additional gains toward 0.6774 (Feb. 5 high). 

Daily chart

Trend: Bullish

Technical levels