It has been a busy morning for the AUDUSD currency pair ahead of the upcoming economic calendar in the US later today. The cross has declined over 0.6% during the trading session and is on course to close a fourth consecutive month in the red after declining over 2% for the month as the bets for a tighter-for-longer monetary policy path from the Fed continue to boost the greenback against the Aussie.
Earlier, disappointing economic data from Australia’s largest trading partner, China, also weighed negatively on the Aussie. Chinese manufacturing PMI for May came in at a surprising 48.8 from 49.2 in April, against the expectation for an increase to 49.4, further exacerbating the sentiment that the world’s second-largest economy could be struggling to revitalize economic activity post-pandemic. Having already declined over 0.6% for the week, the Aussie is entering the business end of the week on a backfoot with a plethora of economic data due from the US in the next three days, including the manufacturing PMIs and the Non-Farm Payrolls (NFP) still due.
The 4H chart shows that the AUDUSD has formed a descending channel as the bets of a tighter-for-longer monetary policy path in the US have helped the bears continue to chirp away at the bulls’ ground in the short term. The price action’s failure to break above the daily pivot at 0.653 could boost the bears’ push lower, with the 0.64469 support level acting as a level of significance for the bears. The fall of the 0.64469 support level would leave the 0.64124 level and the channel’s support at the bears’ mercy in the short term.
For a bullish case, the bulls would need to see the price action move above the trading session high of 0.65387 for any possibility of testing the channel’s resistance and the 0.65595 resistance level outside the channel. The fall of the 0.65595 price level would bring the significant 50-day moving average and the 0.66057 resistance levels into play.
With the cross firmly under bearish pressure, the bulls could be looking to the upcoming economic reports from the US for a potential escape from the bears’ clutches. However, should the data continue to boost the US dollar, the currency pair’s six-month low could be in dire jeopardy as the bears look to break new grounds below.
Sources: TradingView, Dow Jones Newswire, Trading Economics.
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