“¢ Upbeat Chinese manufacturing PMIs provides a goodish lift at the start of a new week.
“¢ The USD bulls seemed rather unimpressed by the ongoing upsurge in the US bond yields.
“¢ The upside remains capped ahead of today’s important US macroeconomic releases.
The AUD/USD pair trimmed a part of its early strong gains, albeit has managed to hold comfortably above the 0.7100 handle through the mid-European trading session.
The pair built on Friday’s goodish bounce and opened with a bullish gap at the start of a new trading week in reaction to stronger Chinese official manufacturing PMI print, which unexpectedly returned to expansionary territory in March.
Moreover, China’s Caixin manufacturing PMI for March also bettered market expectations and eased concerns of a deeper slowdown in the world’s second-largest economy and provided an additional boost to the China-proxy Australian Dollar.
Meanwhile, a bounce in Chinese manufacturing activity triggered a fresh wave of risk-on mood, which coupled with the latest optimism over progress in the US-China trade talks undermined the US Dollar’s relative safe-haven status and remained supportive.
However, a strong follow-through upsurge in the US Treasury bond yields helped limit any further meaningful USD downtick and turned out to be the only factor keeping a lid on any further up-move, with the pair failing ahead of mid-0.7100s (last week’s swing high).
Moving ahead, today’s US economic docket, highlighting the release of monthly retail sales data and ISM manufacturing PMI, will now influence the USD price dynamics and produce some meaningful trading opportunities during the early North-American session.
Technical levels to watch
A meaningful retracement back below the 0.7100 handle might drag the pair back towards the 0.7070-60 support area, which if broken should pave the way for further downfall towards challenging the key 0.70 psychological mark. On the flip side, the 0.7130-40 region might continue to act as an immediate hurdle, above which the pair is likely to aim towards reclaiming the 0.7200 handle with some intermediate resistance near the 0.7170-75 region.
Share
