Technical Bias: Bullish
Key Takeaways
“¢ Chinese HSBC manufacturing PMI registered an expansion with a reading of 50.8.
“¢ Australian dollar surged higher against the US dollar and the Japanese yen.
“¢ AUDJPY support seen at 95.80 and resistance ahead at 96.50.
The Chinese PMI data came as a surprise and encouraged the Australian dollar buyers to take it higher against most of its counterparts, including the Japanese yen.
Major Technical Break?
The AUDJPY pair is heading towards a critical medium term breakout, as it approaches a major triangle resistance zone. There is an important swing resistance area at 96.20 as well, which has acted as a barrier for the pair on numerous occasions. Currently, the pair is flirting with the triangle resistance trend line, and if it closes above the same, then it would call for a test of 1.236 extension of the last drop from the 96.14 high to 95.26 low. However, the most important thing is that if the pair closes above the triangle it might call for heavy gains, as it would be considered as a major breakout in the short term. In that situation, the pair might even challenge the 98.00 resistance zone.
There is a trend line on the RSI as well, which is intact as of now, and points to divergence. This means we might see one more correction moving ahead. Immediate support can be seen around the 95.80 level, which is also the triangle and 50 SMA (4H) support area.
Chinese HSBC Manufacturing PMI
Earlier during the Asian session, the Chinese HSBC manufacturing PMI data was published by the Markit Economics. The forecast was slated for a small rise of 0.3 points from 49.4. However, the outcome was better, as Flash China Manufacturing PMI came in at 50.8 in June (49.4 in May), which is a Seven-month high. The improvement was broad-based with both domestic orders and external demand sub-indices in expansionary territory, according to Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC.
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