It has been a busy morning trading session for the AUDUSD following the economic data release from Australia’s largest trading partner, China. Disappointing Chinese economic data has put the Australian dollar under pressure in the Tuesday trading session, sending the AUDUSD over 0.4% lower during the morning session as investors worried about the pace of the Chinese economic recovery. Data from China showed that April’s fixed assets and retail sales grew by 4.7% and 18.4%, respectively, versus the expected 5.5% and 21%. The industrial production miss after increasing 5.6% year-on-year for April against the expectations of 10.9% weighed on the Aussie.

Even though the market sentiment is currently driven by disappointing Chinese data, the hawkish-sounding remarks from the RBA meeting minutes could provide some support to the AUDUSD. The focus now shifts to the US economic calendar, which will deliver the debt ceiling talks and the US retail sales later today.

Technical

Having broken through the daily pivot point at 0.668 following the release of the Chinese economic data, the bears could be confident in maintaining the bearish momentum in the morning trading session ahead of the eventful US calendar later. However, the bears would need to firmly push below the golden ratio at 0.6677 if they look to have a bite at the 0.66366 support level, a level of significance for the bears. The fall of the 0.66366 support level would clear the path for the bears to attack the 0.0.66076 support level, a fraction of the major support level at 0.65745.

However, should the bears fail at the golden ratio, the bulls would need to manoeuvre around the pivot point if they look to push the price higher towards the initial level of interest at the 0.67108 resistance level. A break through the 0.67108 resistance level would bring the 0.67379 resistance level into play, with the 50-day moving average acting as immediate resistance.

Summary

Traders of the AUDUSD should be wary that as much as the disappointing Chinese data might have put the Australian dollar under pressure but the debt ceiling talks, hawkish-sounding remarks from the RBA and the US retail sales could provide support during the trading session. Thus, the market reaction around the golden ratio could be key in determining the currency pair’s direction during the trading session.

Sources: TradingView, Reuters.

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