- AUD/USD is reporting marginal gains in Asia, but a drop in the Chinese Yuan may play spoilsport.
- Better-than-expected Aussie producer price index (PPI) has gone unnoticed. Meanwhile, the Chinese industrial profit number has also failed to influence the Aussie dollar.
- The hourly chart has aligned for a minor bullish move.
Currently, the AUD/USD pair is trading at 0.7380, having dropped sharply from the high of 0.7463 yesterday.
The USD/CNY pair has gapped higher and is trading 0.44 percent higher on the day at 6.81. The weakness in the Chinese yuan could hurt China proxies like the AUD, Asian currencies and commodities.
On the data front, Australia reported second-quarter PPI at 1.5 percent vs expected print of 0.7 percent. However, the upbeat number has not had any impact on the AUD. On the similar lines, Chinese June industrial profits figure, which came in at 20 percent year-on-year, has also gone unnoticed.
Looking ahead, the currency pair is expected to track yuan and commodity prices. The technical charts indicate, the currency pair could peep above 0.74.
AUD/USD Technicals
The hourly chart shows a bullish divergence of the relative strength index (RSI). Consequently, a minor bullish move to 0.74 cannot be ruled out. However, the uptick will likely be short-lived as yesterday’s sharp losses have shifted risk in favor of a drop to the July 20 low of 0.7318.
Key resistance: 0.74 (5-day MA + 10-day MA + 20-day MA), 0.7466 (50-day MA), 0.7484 (July 10 high).
Key support: 0.7372 (previous day’s low), 0.7318 (July 20 low), 0.73 (psychological level).
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