Daily Price Outlook
As the market anticipates Australian foreign trade data for February and China's Caixin Services PMI for March early on Thursday, the AUD/USD is picking up bids to counterbalance recent losses around 0.6720.
Despite weaker US data, the Australian dollar declined over the past two days, with bulls being restrained even as Reserve Bank of Australia (RBA) Governor Philip Lowe made efforts to revive them.
Governor Philip Lowe of the RBA took action to appease hawks on Wednesday, following the central bank's delay in raising interest rates. The policymaker did not consider a rate cut and indicated that the balance of risks leans towards further rate hikes.
US-China Tensions Over Taiwan Add Pressure to AUD/USD Price
However, the US Dollar managed to recover and disregard the negative data amid recession concerns. Notably, the ADP Employment Change for March fell to 145K, missing the 200K forecast and down from a revised 261K prior.
Both the final S&P Global Composite and Services PMIs for March displayed disappointing results, with the former declining to 52.3 from 53.3 preliminary estimates, and the latter dropping to 52.6 from 53.8 initial projections.
More importantly, the US ISM Services PMI for the same month heightened pessimism as it plunged to 51.2, well below the 54.5 forecast and 55.1 prior.
Weaker US Statistics Ignored as US Dollar Regains Strength
The recent US-China dispute over Taiwan also exerts pressure on the AUD/USD price due to the close ties between Australia and China, in addition to the US Dollar's rally and RBA meetings and actions.
Escalating US Recession Concerns Impact Market Mood and Treasury Bond Yields
In this context, US recession concerns have intensified, negatively impacting market sentiment. The gloomy Wall Street performance also dragged down US Treasury bond yields. However, thanks to the negative sentiment, the US Dollar Index (DXY) managed to bounce back from a two-month low and halt a two-day downtrend.
AUD/USD – Technical Outlook
The AUDUSD pair's decline halted near the 0.6665 level, and the price has started to recover in an attempt to resume the intraday bullish wave, with an initial target of 0.6780.
The EMA50 is attempting to prevent the price from incurring further losses, supporting the continuation of the projected positive scenario. However, it is important to note that breaking through the 0.6665 level could halt the anticipated rise and push the price to visit the next correctional level at 0.6550.
Today's likely trading range is between 0.6650 support and 0.6770 resistance.
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