AUD/USD: The Squeeze Carries On
Ming Lam April 30, 2020 4:17 AM
The AUD/USD continues a powerful rebound from a low marked on March 19...
The AUD/USD, currently above 0.6500, continues a powerful rebound from a low marked on March 19.
Overnight the U.S. Federal Reserve hinted at keeping near-zero interest rates and asset purchases for the foreseeable future. The central bank acknowledged that the coronavirus pandemic is posing a considerable risk to the medium-term outlook for the economy.
The U.S. dollar then weakened against its major counterparts, with the ICE U.S. Dollar Index sinking to a two-week low of 99.48 and posting a four-day decline.
Meanwhile, led by the U.S. stock market (up over 2% overnight), global stock markets are enjoying a broad-based rebound as investors' risk appetite grows.
Many traders regard the Australian dollar as a "proxy trade" of the Chinese economy in view of closing trading relationship between the two countries. China's economic data are therefore important to reading the AUD/USD pair.
This morning, China's Manufacturing PMI posted at 50.8 for April (51.0 expected) and Non-manufacturing PMI at 53.2 (52.5 expected). Not bad.
So, ingredients for producing downward pressure on AUD/USD are missing.
On a Daily Chart, AUD/USD keeps trading within a Bullish Channel drawn from March 19 (closing low 0.5744, intraday low 0.5508).
It is staying comfortably above the ascending 20-day moving average, which has just crossed above the 50-day one.
Trading above the Key Support at 0.6270 (around the 50-day moving average), the pair is expected to encounter Overhead Resistance at 0.6685 and 0.6850.
Source: GAIN Capital, TradingView
On an Intraday (30-Minute) Chart, AUD/USD remains within a Bullish Channel drawn from April 28.
Technical indicators (20-period, 50-period moving averages, relative strength index) are still so well directed to favor a bullish bias.
Key Support is located at 0.6520, while Overhead Resistance is expected at 0.6565 and 0.6590.
Source: GAIN Capital, TradingView
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.